The hits just keep on coming for Turkey’s battered currency.
The lira has tumbled to a fresh record low against the dollar this morning, dropping 1.5 per cent after executives at the country’s widest selling newspaper were detained, and looming talk of another rating downgrade.
Cemil Ertem, chief adviser to the country’s president, said Turkish banks would face higher funding costs should Fitch downgrade the country in a move that would strip the country of its last major investment grade borrower status. A decision is due on January 27.
Although Mr Ertem added the banking sector would be able to withstand another junking should Fitch join the likes of S&P and Moody’s, his comments have done nothing to prop up the plummeting lira, which has now depreciated by 30 per cent since last May.
Fitch placed Turkey on negative watch back in August after a failed military coup that has subsequently led to a sweeping crackdown on suspected plotters in the military, civil service, judiciary and the media.
A junking would lead to higher borrowing costs for commercial banks and place a squeeze on consumer lending.
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