(Bloomberg) -- Traders are ramping up protection against turmoil in the lira a week before Turkey’s elections, sending a measure of anticipated swings in the currency to the highest in the world. 

The lira’s implied volatility against the dollar over the next week surged to 74% from 8.4% on Friday to surpass all other major currencies tracked by Bloomberg. Meanwhile, the Borsa Istanbul Banks Index, that tracks shares of Turkey’s lenders, rallied the most in two months.

Market participants are bracing for further weakening in the lira, regardless of the outcome at the ballot box, amid concerns surrounding the sustainability of the government’s efforts to keep tight currency controls. Derivatives traders see a more-than-even probability that the lira will slide by 25% to 26 per dollar by the end of the third quarter, according to Bloomberg calculations based on prices of put and call options.

“We might see a significant slide in the Turkish lira,” Commerzbank AG strategist Ulrich Leuchtman wrote in a note Monday. “The artificial support of the official exchange rates will become increasingly shaky and will likely be impossible to maintain for much longer” and “the political motivation for maintaining the pretense of lira stability to the electorate will no longer exist,” he said.

The lira has already fallen 23% in the past year to record lows, and was little changed at 19.5073 against the greenback as of 5:54 p.m. in Istanbul. 

Emerging Markets Enter High-Anxiety Phase With Turkey Vote 

Despite the jitters surrounding Turkey, a further slide in the lira is unlikely to have knock-on effects on the rest of emerging markets, given that it’s a reflection of the nation’s own mismanagement, according to Commerzbank. 

“The mistakes of Turkish monetary policy are so clearly homemade and are so clearly not being repeated in other countries that I find it difficult to imagine how a failure of this very specific monetary policy will be contagious for other currencies whose central banks act very differently,” Leuchtman said.

General elections will take place on Sunday, with President Recep Tayyip Erdogan’s 20-year rule being challenged by opposition candidate Kemal Kilicdaroglu, who has promised a return to economic orthodoxy. 

The BIST Banks Index soared as much as 9% before trading 8% higher as of 5:34pm in Istanbul. Turkiye Is Bankasi and Turkiye Garanti Bankasi AS were the biggest gainers among lenders, wtith gains of 10% and 9.1%, respectively, 

--With assistance from Tugce Ozsoy and Paul Abelsky.

(Adds banking shares’ performance, details throughout)

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