The Turkish lira’s rally against major currencies in the early morning hours of November 7 was short-lived as heightened political tension took its toll on the currency that hit a new low later in the day to trade at 3.1797 against the US dollar as of 1900 Istanbul time.

In early trading on November 7, the lira gained some ground on the news that S&P upgraded Turkey’s rating outlook to positive from negative. But, political worries following the arrests of opposition lawmakers proved stronger and the lira dropped 0.7%. That brings the currecy's fall since the July's coup attempt to over 9%. The main stock exchange index, BIST-100, was up 2.03%.  

Pro-Kurdish opposition party HDP decided to halt all legislative activity in parliament after nine of its lawmakers, including co-chairs Selahattin Demirtas and Figen Yuksekdag, were arrested on November 4. The HDP is not fully withdrawing from the parliament but its members will not take part in commission meetings and sittings. Commenting on the HDP’s latest move, Deputy Prime Minister Numan Kurtulmus said on November 7 that the government is not expecting an early election.

By-elections should be held if 5% or 28 seats in parliament become vacant. The HDP has 59 deputies in the 550-seat parliament.

Meanwhile, relations between Ankara and Brussels remain tense. The EU should change its stance on Turkey following the government’s recent harsh measures and stop the flow of billions of euros in aid if Ankara fails to stick to its migrants deal with the bloc, Austrian Foreign Minister Sebastian Kurz said on November 7, AFP has reported, according to the Hurriyet Daily News. “Over recent years Turkey has moved further and further away from the EU, but our policy has remained the same. That can’t work. What we need are clear consequences,” he said.

Later this week, the EU is expected to release its annual report on Turkey, which is said to be highly critical of Ankara. Turkey defends its measures against the HDP and the sweeping purges of supporters of US-based cleric Fethullah Gulen in the wake of the failed July 15 coup attempt on the ground that they pose serious threats to the country’s national security.