Erdoğan’s “Interest-Free Economy” Remarks Trigger Sell-Off on Borsa Istanbul
Turkey’s Erdogan Meets With Hungary’s Orban
President Recep Tayyip Erdoğan’s renewed call for an interest-free economy during the 2nd Istanbul World Islamic Economy Summit has sent ripples through Türkiye’s financial markets, prompting a notable sell-off in Borsa Istanbul.
Speaking at the Istanbul Financial Center, Erdoğan stated:
“Challenging the system that enslaves humanity to interest is a commendable stance. As Erdoğan, I will continue to voice my longing for an interest-free economy with a loud and clear tone.”
BIST 100 Drops Below 9,000 Points for First Time Since March
Following Erdoğan’s speech, the BIST 100 index plunged to 9,010 points, marking the first time since March 24, 2025, that it has fallen below the symbolic 9,000-point threshold. The market reaction intensified shortly after the remarks, with the index declining 1.75% as of the latest trading data.
Before Erdoğan’s speech, Borsa Istanbul had already been down around 1.2%, but the pace of losses accelerated, nearing a 2% drop, according to economist Assoc. Prof. A. Oğuz Demir.
Market Sentiment Rattled by Political Messaging on Interest Rates
Erdoğan’s strong rhetoric against interest-based financial systems reignited investor concerns about the future direction of monetary policy in Türkiye. Market participants interpreted the statements as signaling potential intervention in interest rate policies, despite the Central Bank’s earlier emphasis on monetary tightening to fight inflation.
The Borsa’s downturn reflects both domestic investor skepticism and foreign investor caution, particularly in a period when financial stability hinges on predictable economic governance.
Broader Economic Context
Erdoğan has repeatedly emphasized his ideological stance against interest-based economies, advocating instead for Islamic finance principles. While these remarks resonate with certain policy circles, they often trigger volatility in capital markets, where interest rates remain a fundamental pricing mechanism.
As Türkiye continues to battle high inflation, currency volatility, and foreign capital flight, investor sensitivity to such political commentary remains high.
