Turkish Lira is on descent

Published on: 10-Aug-2020
Category: Trading
Last updated: 10-Aug-2020

Turkish Lira is on descent

Turkey continues to face difficulties with its currency. The value of the lira continues to fall and the consequences hit the country's economy, especially during the current crisis. At the moment you get 7.34 Turkish lira for one dollar and 8.61 lira for one euro. As a result of the decline in value, the country's imports are becoming more and more expensive and inflation is becoming more and more likely. The resulting decline in purchasing power then also has an impact on companies' profits. According to the rating agency S&P, every third loan in Turkey has been taken out in foreign currencies. As the lira is now depreciating, the repayments of the loans become more and more expensive. The risk of a loan default increases and can bring the country further into trouble. The country's key interest rate is currently 8.25 percent, almost 16 percent below the percentage it was a year ago. Turkey is no longer attractive for foreign investors.

Since the beginning of the year, the lira has fallen by 20 percent. The country was hit hard by the corona crisis. In addition to the dwindling reserves of the central bank, the lack of tourism is also having an impact on the Turkish economy. In the first six months there were 75 percent fewer tourists in the country.



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