The Turkish lira has lost 22% of its value since the beginning of the year
There is increasing risk to impose additional restrictions on the movement of capital (capital controls) in Turkeyif the pressures on the pound and financial markets, the credit rating agency estimates S&P Global.
The Turkish pound has lost 22% of its value since the beginning of the year, raising concerns that the country is heading for a repeat of the currency crisis seen in late 2021.
An S&P analyst, Maxim Rybnikov, said the company’s decision in April to downgrade Turkey’s debt rating reflected its concerns about the introduction of additional capital controls. “I think the risk is increasing”he added.
Another analyst added that the fall of the pound means that eventually problems will “appear” in the banking sector of Turkey. The pace of tourism recovery is one of the few positive developments.
The pound continued to fall today, with the currency approaching a record low, following recent statements by the Turkish president. Recep Tayyip Erdogan that interest rate cuts will continue.
Turkish currency falls 2% and in the afternoon its exchange rate against the dollar was about 17 pounds against a dollar. In December, the exchange rate had fallen to 18.4 pounds per dollar.
The pound has lost 22% of its value since January 1 and 49.7% in one year.
“Pressure continues to rise on the pound,” said Fawad Razakzada, an analyst at CityIndex, who said on Monday that Erdogan had announced his intention to cut interest rates further despite inflation in Turkey reaching 73.5% year-on-year. “Investors are also afraid that increase in the price of oil “It will worsen inflation in Turkey.”
