The Turkish lira hit a new low against the U.S. dollar on Sept. 16 after credit rating agency Moody’s downgraded the ratings of 13 Turkish banks.
Turkey’s currency fell to a historic low of 7.50 to the dollar after starting the day at around 7.4920. The lira closed the day at 7.50 exchange rate.
Moody’s Investors Service on Sept. 15 downgraded the ratings of 13 Turkish banks following its Sept. 11 unscheduled cutting of Turkey’s sovereign rating to B2 with a negative outlook from B1 with negative outlook.
The downgrading of the sovereign rating resulted in the lowering of ceilings for foreign currency deposits to Caa1 from B3 and for foreign currency bonds to B2 from B1.
The outlook reflects the downside risks associated with the Turkish authorities’ inadequate reaction function, which makes Turkey more likely to suffer a balance of payments crisis, Moody’s said.