Date of Award

Spring 5-18-2026

Document Type

Thesis

Degree Name

Master of Public Policy (MPP)

First Advisor

Dr. Amand Marnix

Subject Area(s)

Management, Political Science, Economics

Abstract

On March 19, 2025, a key Turkish opposition political figure was unexpectedly arrested on what were presumed to be politically motivated charges. In response, the lira depreciated sharply. Meanwhile, Türkiye has a large and active dollar stablecoin market. Using a time series dataset of trade-frequency Tether vs. lira trading, I exploit this natural exogenous geopolitical risk-off event to investigate the response function of stablecoin traders active in Türkiye to this shock. I find that the shock is associated with a large (5.33% ) abnormal depreciation of the lira. Further, I show that the shock is associated with an abnormal widening of fiat-synthetic dollar parity deviation beyond that which is characteristic of standard constrained dealer intermediation. I conclude that this exogenous geopolitical shock had large but short-lived and differential effects on fiat and synthetic dollar-lira markets, suggesting potential dollar market segmentation.

Keywords: foreign exchange market, US dollar, stablecoins

JEL Codes: F31, G14, G15

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