(March 26): US President Donald Trump praised Turkey’s President Recep Tayyip Erdogan, giving his endorsement to a government that’s faced a week of protests at home and an exodus of foreign capital amid a crackdown on the opposition.

The remarks will confirm investor expectations that Turkey was likely to face little external political pressure after Ekrem Imamoglu, the popular mayor of Istanbul and Erdogan’s main political rival, was detained and then jailed last week. The lira traded little changed early on Wednesday and markets have started to rebound even as tens of thousands have protested in daily marches in Istanbul.

“Good place, good leader, too,” Trump said during a meeting of ambassadorial nominees on Tuesday. The comments came after a brief introduction by Colony Capital LLC founder Tom Barrack who is Trump’s long-time friend and nominee to be ambassador to Turkey.

“President Erdogan probably feels that he will have good relations with President Trump in the years ahead, as he had” during Trump’s first term in office, Mustafa Akyol, a senior fellow at the Cato Institute’s Centre for Global Liberty and Prosperity, said on Bloomberg TV on Wednesday.

Trump’s remarks come as Turkey’s top economic officials have intensified efforts to reassure investors who were unsettled by the political turmoil and its implications for markets. On a call attended by thousands of foreign investors on Tuesday, Treasury and Finance Minister Mehmet Simsek said he’d do “whatever it takes” to stabilise markets, according to people who joined the teleconference organised by Citigroup Inc and Deutsche Bank and who asked not to be named because the meeting was private.

Simsek and Turkey’s central bank Governor Fatih Karahan, who was also on the call, made a broad presentation on Turkey’s economy to ease investor concerns on everything from inflation to interest rates and government debt. But lira policy was front and centre, the people said.

The currency traded less than 0.1% down at 37.9976 per dollar as of 8:20 a.m. in Istanbul on Wednesday. It’s been held within a tight range below 38 per dollar for six trading days since shock news of the mayor’s detention a week ago briefly sent it plunging more than 10% past 40 per dollar.

“Judging by the relatively stable lira-dollar exchange rate compared with some key equity indexes, we think the central bank has continued its pro-lira interventions beyond Friday, further depleting reserves,” said Selva Bahar Baziki, an economist at Bloomberg Economics in Ankara. “We expect these pro-lira interventions to extend into the near term.”

The currency’s performance against peers has been central to investor-friendly policies Simsek began implementing after his appointment in 2023. A stable lira allowed carry trade investors — who borrow in currencies with low interest rates and then invest in higher-yielding assets in another currency — to post more than 30% returns in Turkey last year, one of the best in the world.

Those trades helped Turkey to accumulate foreign reserves after years in the red. That’s what set the alarm bells ringing for policymakers when Imamoglu’s March 19 detention pushed the lira as much as 11% lower within hours, risking a sudden unravelling of the investment proposition that made the lira a top trade in 2024.

In a short statement, the Finance Ministry said that about 4,500 investors attended the investor call.

Simsek and Karahan also reinforced Erdogan’s pledge to maintain the conventional policies that have been in place for two years now, according to people who attended. The officials said they were wary of how much of a pass-through the lira’s recent weakness might have on inflation and left the impression that they might opt to keep interest rates unchanged at the central bank’s next policy meeting scheduled for April 17, they said.

Simsek told the investors that 60% of dollar demand came from foreigners during the selloff last week, 30% from local corporates and just 10% from retail investors, according to the people.

“Most of the outflows seem to have been foreigners,” said Timothy Ash, a senior emerging-markets sovereign strategist at RBC BlueBay. There’s “little evidence of dollarisation by locals, which would be a game changer,” he said.

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