Turkish Lira under pressure after Fitch downgrades Turkey to junk – Danske Bank
|Analysts at Danske Bank note that the Turkish sovereign rating downgrade by Fitch Ratings keeps the Lira pressured.
Key Quotes:
“The Turkish lira is under pressure this morning following Fitch's decision to cut Turkey's sovereign further to Junk over the weekend. Fitch reduced the nation's long-term foreign currency debt rating to BB-, three notches below investment grade and on par with Brazil, Greece and Bangladesh.
The ratings company warned of deteriorating institutional independence and economic policy credibility after President Recep Tayyip Erdogan unexpectedly removed Cetinkaya as his central bank chief last week.
On top of the concerns of institutional independence in the country, there is a looming risk of tightening US sanctions, as the delivery of parts of a Russian missile system is taking place, which has been sharply criticized by the US. We expect the Turkish Lira to weaken in the coming months against the USD.”
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