Turkey's lira fell as much as 12.7% to an all-time low of 42 to the dollar on Wednesday, with bonds and stocks also tumbling, after authorities detained President Tayyip Erdogan's main political rival.

The Turkish lira weakened sharply to a record low against the U.S. dollar and the Istanbul stock market dived after the main opposition challenger to President Recep Tayyip Erdogan was arrested. Investors sold Turkish assets as fears grew that Erdogan’s increasingly authoritarian stance and detention of his biggest rival will destabilize the North Atlantic Treaty Organization member.

The Turkish lira fell to a record low against the dollar after reports that Istanbul mayor Ekrem Imamoglu, a key rival of President Recep Tayyip Erdogan, was arrested. Imamoglu was detained Wednesday as part of an investigation into alleged corruption and terror links,