The Turkish lira hit a fresh low and stocks plunged by 4.2 per cent today after three cabinet ministers stepped down over a high-level corruption scandal that has rattled the government.
Interior Minister Muammer Guler and Economy Minister Zafer Caglayan, whose sons have been charged over bribery allegations, were the first to announce their resignations, followed by Environment Minister Erdogan Bayraktar, whose son was also caught up in police raids but has not yet been charged.
Bayraktar upped the stakes by calling on Prime Minister Recep Tayyip Erdogan to follow suit, the first time the premier has faced such a challenge from within his own ruling Justice and Development Party (AKP).
Erdogan has described the probe as a smear campaign against his government and has responded with a purge of the police force.
In response to the escalating crisis, the lira weakened to 2,0907 at today's close, from 2.0849 in afternoon trading.
Already under heavy pressure this year in expectation of the US Federal Reserve's decision to slow its stimulus package, the Istanbul stock market dropped by 4.2 per cent to 66,096,56.
Central bank chief Erdem Basci said yesterday that, to combat volatility on the currency market, the bank would step up its provision of liquidity by "injecting at least 450 million dollars per day until December 31".
As a leading emerging economy, Turkey has been one of the main beneficiaries of the Fed's stimulus as US investors sought higher returns abroad.
