Turkish lira borrowing costs in the offshore market and insuring the country's debt against default are remaining steady at levels set last week, indicating continued nervousness among traders following recent market volatility. The offshore rate, tomorrow next offshore forward implied yield, was at 187%, close to its highest level since June 2023. The credit default swap for Turkey’s five-year debt stood at 327 basis points, showing little change from Friday's level which hit a one-year high.

These movements suggest traders are preparing for more turbulence in Turkish assets on Monday after the arrest and imprisonment of Istanbul Mayor Ekrem Imamoglu on corruption charges. Imamoglu, seen as a key opponent to President Recep Tayyip Erdogan, sparked protests and clashes with police in major cities on Sunday.

The Turkish lira weakened slightly against the dollar, trading at 38.0086 per dollar. Imamoglu's detention last week led to a severe market downturn, with the lira, stock market, and bond yields all affected. To mitigate the impact, Turkey's top economic and financial institutions took action promptly.

The central bank met with bank executives to address potential market volatility, while Treasury and Finance Minister Mehmet Simsek discussed measures with regulators to tackle market unrest. Turkey’s market regulator introduced various initiatives to support the market, such as banning short-selling, easing buyback rules, and reducing capital protection requirements for margin trading.