• The BIST 100 index plummeted as much as 7%, triggering two separate trading halts and extending weekly losses beyond 15%.
  • The central bank suspended its regular repo auction and hiked overnight lending rates to 46% in a dramatic policy tightening move.
  • Over 25 major Turkish companies, including Turkish Airlines, initiated share buyback programs in an attempt to stabilize prices.

Turkey’s main stock index suffered one of its worst single-day routs in recent memory on Thursday, plunging as much as 7% and triggering multiple market-wide trading halts in a wave of panic-driven selling. The BIST 100 index closed down 5.4%, capping a weekly loss of over 15% and marking its steepest decline since late 2024.

The sell-off accelerated in early trading, with the index dropping over 5% to trigger an automatic 30-minute halt. When trading resumed, losses deepened rapidly, hitting the 7% threshold that activated a second circuit breaker. The banking sector bore the brunt of the selling pressure, with the banking index collapsing more than 9%.

In a swift response to the turmoil, the central bank suspended its regular one-week repo auction and dramatically tightened policy, hiking the overnight lending rate to 46% from a previous level believed to be around 42.5%. The move represents a sharp 350-400 basis point tightening, according to traders familiar with the matter. The central bank also intervened heavily in the foreign exchange market, selling an estimated $10 billion to curb volatility, people familiar with the transactions said.

“The scale and speed of the intervention underscores the level of concern among policymakers,” said a senior trader at a local brokerage, who asked not to be named discussing sensitive market moves. “They are trying to stem a complete loss of confidence.”

The aggressive monetary tightening is expected to significantly raise funding costs for Turkish banks, which will likely lead to higher lending rates and reduced credit volumes. This could pressure net interest margins and dampen broader economic activity.

In a coordinated effort to support their own shares, more than 25 major Turkish companies announced share buyback programs. Turkish Airlines and several state-owned banks were among those initiating repurchases, though the announcements did little to stem the broader market slide.

The turmoil extended to Turkey’s sovereign dollar bonds, which suffered their largest weekly price decline since January 2024. The sell-off highlights waning confidence among international investors, who have been spooked by the combination of political uncertainty and monetary instability.

Despite hitting new highs as recently as August and showing resilience to political shocks earlier in the year—including the arrest of Istanbul’s mayor and subsequent protests—the market’s abrupt reversal underscores the ongoing fragility tied to domestic events and broader emerging-market risk sentiment.

Efforts to reach the central bank for further comment on its policy moves were not immediately successful. Analysts expect continued volatility in the short term, with monetary tightening likely to keep equities under pressure, particularly in banking and other interest-sensitive sectors.