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(Bloomberg) -- Turkish authorities detained President Recep Tayyip Erdogan’s top political rival on corruption charges, triggering a selloff in stocks and the lira.

Istanbul Mayor Ekrem Imamoglu, the most popular Turkish politician who could one day challenge the president’s rule, was taken into custody on Wednesday, sparking protests from members of opposition parties.

The mayor’s detention highlights an increasingly aggressive campaign that Erdogan is waging against critics to silence dissent. He also needs to broaden his support base in parliament to have a shot at running for office again after hitting the two-term constitutional limit. The probe against his most formidable challenger serves as a stark reminder of the risks involved in investing in Turkey, where assets posted the biggest declines worldwide.

Authorities said as much as $9 billion were spent in less than a day to support the lira, which showed some signs of stabilizing as investors bet the risk of a reversal in economic policies remains limited.

Erdogan has “always said that he respects the election process and his term limits. What has happened this week throws that into fundamental doubt,” said Richard Segal, a fixed-income analyst at Ambrosia Capital in London. “With that in mind, it is likely a repricing in progress, rather than a continuing deterioration of market sentiment and economic policies should remain orthodox.”

Market Mayhem

Treasury and Finance Minister Mehmet Simsek, whose decision to join Erdogan’s government two years ago boosted markets, stepped in to reassure investors, saying that the government’s economic policy remain unchanged.

“The economy program we have been implementing continues in a determined fashion,” he said on X.

That did little to mitigate the slump in equities and government debt. The nation’s stocks dropped so abruptly that they twice triggered a trading halt, with the benchmark Borsa Istanbul 100 Index closing down 8.7% in Istanbul — the steepest drop in four years. In New York, the iShares MSCI Turkey Exchange Traded Fund tumbled 12%.

The yield on lira denominated, 10-year government bonds surged 255 basis points to 30.74%.

The lira weakened as much as 11% before trimming its loss to 3.2% at 37.8952 per dollar as of 6:10 p.m. in Istanbul. The currency’s relative stability was underpinned by an intervention by the nation’s banks, which sold between $8 billion to $9 billion on Wednesday, a central bank official with direct knowledge of the matter told Bloomberg.

The bank is “closely monitoring developments in foreign exchange markets and intervening against volatility when it deems necessary,” the official said, asking not to be identified, citing the sensitivity of the matter.

The severity of the latest political crisis means the market downturn may last longer than many anticipate, according to Bernd Berg, a London-based strategist at In Touch Capital.

“I think the news out of Turkey is shocking and will put Turkish assets under heavy selling pressure for months to come unless President Erdogan reverses course,” Berg said. “For me it’s deja-vu, It reminds me of similar periods over the last decade when negative domestic news was the trigger for a sustained and longer-lasting selloff.”

Imamoglu’s Diploma

A day before Wednesday’s probe burst into public, authorities decided to revoke Imamoglu’s university diploma, citing irregularities. If finalized, that alone would bar the mayor from challenging Erdogan in future elections — having a university degree is required to run for president.

A conviction on the current charges including bribery and corruption would also disqualify him from holding national office.

Imamoglu, who already beat Erdogan’s handpicked candidates in municipal elections twice in the last six years, said the police force was being weaponized to bring his political career to an early end. He was set to be named by the main opposition party CHP on Sunday as their presidential candidate.

Turkish authorities banned any protests, rallies and press conferences for four days to preempt mass rallies. National TV outlets showed footage of a group of students protesting in front of Istanbul University, where Imamoglu obtained his diploma.

Lawmakers of the opposition party also protested his detention in the Turkish general assembly, bringing parliamentary sessions to an end for the day.

The probe against Imamoglu follows the arrest in January of Umit Ozdag, the leader of a small nationalist party and a vocal critic of Erdogan. Investigations have also ensnared national politicians, journalists, and even a celebrity agent earlier this year. Former Kurdish leader Selahattin Demirtas has been imprisoned for years, following his decision to challenge Erdogan in presidential elections.

The next election is officially set for 2028. For a chance at extending more than two decades in power — as prime minister and then president — Erdogan would need to secure enough parliamentary support to change the constitution or call for a snap election. He has repeatedly said he wouldn’t be seeking another term, but his political allies including members of his ruling AK Party say Erdogan should stay in power.

--With assistance from Srinivasan Sivabalan, Ugur Yilmaz and Selcuk Gokoluk.

(Updates with latest market prices.)