Turkey faces mounting pressure as lira, stocks and bonds come under strain

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Turkey’s financial markets are coming under renewed pressure, with the Turkish lira falling to a fresh record low against the US dollar while stocks and government bonds have also taken a hit.

The lira has approached 49.65 per dollar, extending a run of record lows and putting the currency more than 17% lower against the US dollar since the beginning of the year.

The pressure has also spread to Turkey’s stock market.

Turkish shares fell as much as 5.7% in a single session, marking the market’s sharpest two-day decline since March 2025, according to the figures cited in the report.

The selloff followed a major asset manager’s failure to meet investor redemption requests, raising concerns about liquidity pressures across Turkey’s broader investment fund industry.

At the same time, Turkey’s bond market has come under renewed strain.

The yield on the country’s 10-year government bonds climbed back above 32.6%, reversing several weeks of declines within just a few trading sessions.

High interest rates failing to stop currency pressure

The developments are particularly significant because Turkey’s central bank has maintained a policy interest rate of around 37%, a level intended to help contain inflation and support the lira.

Despite high borrowing costs, inflation remains near 31%, and the currency continues to weaken.

That combination is increasing pressure across several parts of Turkey’s financial system at the same time.

The lira is losing value, equities have suffered a sharp sell-off, and government borrowing costs are rising, despite interest rates already being elevated.

For investors, the latest moves highlight the continuing challenges facing Turkey as authorities attempt to stabilize the currency, bring inflation down, and maintain confidence in the country’s financial markets.

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