Source: Istanbul – Reuters
The Turkish lira fell to record lows against the dollar and the euro, on Monday, after Moody’s downgraded Turkey to B2 from B1 late last week and warned of a deeper economic crisis.
The credit rating agency said Turkey’s external vulnerabilities would likely result in a balance of payments crisis, and that financial safety margins were eroding.
The lira touched a new low of 7.4980 for the dollar, bringing its losses since the beginning of this year to about 21%. The currency recorded an unprecedented low against the euro at 8.9031, reaching a 25% decline since mid-2019.
“The possibility of a financing shock remains the main danger that the Turkish economy faces,” said Ihsan Khoman, Director of Middle East and North Africa Research at MUFG Bank.
But President Recep Tayyip Erdogan, a constant critic of credit rating agencies, launched a new attack on these institutions at the weekend after the announcement of Moody’s decision, and in his remarks referred to Standard & Poor’s.
“You cannot dictate conditions to Turkey under the sword of sanctions. You did this before. Did you get a result? No, it did not happen. It will not happen in the future,” he said in the speech.