- The Turkish lira again sank after Moody's downgraded 20 financial institutions.
- The currency stabilized after its huge decline in early August, but again falls.
- By the morning of Tuesday, it was trading at around 6.3 against the dollar.
- You can follow the movements of the lyre in Markets Insider.
A week later from the spotlight, turkish lira again falls on Wednesday, as concerns over the state of the fragile financial system of the country are growing.
Despite the fact that it is still much stronger than a few weeks ago, the lyre fell to 6.3 against the dollar by 9.30 m. BST (4.30 mts.) On Wednesday, which was not observed for two weeks.
The main catalyst for the movement is, apparently, the decision of the rating agency Moody's on Tuesday to lower the credit rating of 20 Turkish financial institutions. In a downgrade, Moody's analysts' banks cited what they called "A significant increase in the risk of a fall in the scenario," for Turkey's creditors.
"There is an increased risk of a scenario of declining incomes, when worsening investor sentiment limits access to market financing," Moody said, noting that "Turkish banks rely heavily on financing in foreign currency."
A note written by Vice President / Senior Analyst Carlo Gori and MD / financial institutions Sean Marion says that the Turkish banking sector faces a potential financial crisis:
"Within the next 12 months it is necessary to refinance about 77 billion US dollars of wholesale bonds and syndicated loans in foreign currency, or 41% of the total market financing. Turkish banks own about 48 billion dollars. USA on liquid assets in foreign currency and have a mandatory amount of $ 57 billion. US reserves in the Central Bank of Turkey, which will not be fully available. "
"In an unfavorable scenario, when investor sentiment is changing, the risk of a prolonged closure of the wholesale market would lead to what most of the banks were materially deleting or requiring external financing from the government or the Central Bank."
Problems in Turkey began in early August, when the administration of Trump put a number of sanctions against Turkey in retaliation for his refusal to release Andrew Brunson. Branson is an American pastor detained by the Turkish authorities for his alleged support the banned labor party of Kurdistan and the movement of gulenists, both of whom are accused of involvement in the unsuccessful coup of 2016 against President Erdogan.
These sanctions include an announcement of doubling the tariffs for metal imports to the US from Turkey, which was the first catalyst of the tremendous turmoil in the financial markets over the past few weeks.
At some point during the worst crisis, the lyre fell by more than 40%.
The collapse of the lyre plunged the entire territory of the developing market into chaos, an infection that causes a similar South African rand, Argentine peso and Indonesian rupee to fall in response.