Fitch downgrades Turkish debt to B with negative outlook
Inflation in the country continues to hit record highs and, due to the conflict in Ukraine, commodity and energy prices are rising. It stood at 78.62% in June 2022, its highest level for 24 years. The currency crisis is in full swing with the pound in continuous decline losing 44% of its value against the dollar in 2021 and a further 23% since the beginning of 2022.
As of 1 July 2022, the central bank’s net foreign exchange reserves remained close to their lowest level in twenty years at $7.51bn. “We estimate that the central bank’s net foreign exchange asset position turned slightly negative in June and fell to minus $64bn excluding currency swaps, similar to the level in December 2021. We expect international reserves to fall to $94bn by the end of 2022 and to $88bn in 2023, bringing the current account reserve coverage to 2.7 months, below the median ‘B’ forecast of 3.8 months,” the UK analysts commented.