The Turkish asset sell-off calmed down following measures announced by authorities to control volatility after President Recep Tayyip Erdogan's main political rival was detained leading to a market decline.

The Turkish currency stabilized at 37.8869 per dollar after the central bank's decision to conduct lira-settled forward currency sales to manage exchange-rate fluctuations and ensure market liquidity. Additionally, the stock market received a boost from the market regulator's move to relax share buyback regulations, with the Borsa Istanbul 100 Index rising by 1.2% in response to the slump that wiped out $10 billion in Turkish equities' market value.

Despite concerns, investors are optimistic that Erdogan's market-oriented economic policies, such as strict monetary measures, won't be jeopardized by the recent political unrest. Goldman Sachs economist Clemens Grafe suggested that foreign investors' selling pressure is likely to be restrained.

The detention of Istanbul Mayor Ekrem Imamoglu, a popular political figure and potential challenger to Erdogan's leadership, on corruption allegations without evidence has led to protests from opposition party members. This event highlights Erdogan's growing aggressive actions against critics to suppress dissent.

Investing in Turkey carries risks, as demonstrated by the substantial declines in assets following the mayor's detention. Authorities spent up to $9 billion to support the lira amidst the turmoil. Grafe cautioned that the political risks may persist, impacting market sentiment and preventing prompt rebuilding of long positions.

Longer-term government bonds showed gains, with the yield on the 10-year notes dropping by 121 basis points to 29.53%. Future contract implied yields also decreased significantly. Despite the challenges, Gordon Bowers of Columbia Threadneedle Investment remains optimistic about lira investments, expecting modest returns over the next year if the central bank maintains its strategy of real exchange rate appreciation.