The Turkish lira experienced a 10% decline on Wednesday, signaling a significant downturn. This presented an opportunity for Pavel Mamai, the co-founder of Promeritum Investment Management, to make his move. Mamai predicted that the sudden lira slump would lead to multi-strategy funds selling off, creating a buying opportunity.

The drop in the lira's value was due to the detention of Istanbul mayor Ekrem Imamoglu, causing foreign funds to swiftly reduce their exposure to Turkey. This resulted in a shift from profitable carry trades to losses. Mamai seized the chance to purchase lira assets, expecting central bank intervention to support the currency and maintain high interest rates, which had driven carry-trade returns prior to the slump.

The political risks in Turkey were highlighted by the government cracking down on a political opponent of President Erdogan. Despite concerns about local banks selling off significant holdings to stabilize the lira, Mamai believed the central bank's ample reserves could address foreign investors' withdrawals, while the real risk lay with local investors.

Following a surprise interest rate hike by the central bank, the lira weakened further, with bonds yields rising and stocks plummeting. Analysts suggested that the central bank's reserves were sufficient to manage any withdrawal of foreign hot money, with the main concern being a potential negative impact on domestic savers leading to a strain on reserves and potential inflation.