The Turkish Lira fell further on Wednesday after Moody’s warned the worst is yet to come for the country’s banks while downgrading 18 banks and two finance companies in Turkey.
The Lira slumped to 6.3746 against the dollar by 11.30 a.m. (Istanbul time) on Wednesday, the lowest in around two weeks.
So far, Lira is the worst-performing emerging-market currency this year together with the Argentine peso.
Lira came under more pressure after Turkey's economic confidence dropped to its lowest level yesterday, its worst since March 2009. The fall in consumer, real sector, services, retail trade and construction confidence indices pulled the overall confidence index to a nine-year low.
“The downgrades primarily reflect a substantial increase in the risk of a downside scenario, where a further negative shift in investor sentiment could lead to a curtailing of wholesale funding. The rating agency also notes that Turkey's operating environment has deteriorated beyond its previous expectations, and it expects it will continue to so,” Moody’s Investor’s Service said in a statement on Tuesday.
“A slump in the Turkish currency, bonds and stocks amid investor concerns about the country’s economic, fiscal and external stability, has sparked renewed asset sales and focus on the vulnerabilities of other emerging and frontier market nations, the ratings agency noted in its latest Credit Outlook, released on Thursday.
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