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The main impact of coronavirus on Turkey’s sovereign credit profile is through external financing risks, Fitch Ratings said in a report published on Friday.

Additional takeaways

“External pressures remain Turkey’s main credit weakness.”

“Turkey’s private-sector external debt rollovers have remained resilient despite financial market volatility as pandemic took hold globally.”

“Forecasting a stabilisation of Turkey’s balance of payments in the second half of 2020 but there are sizeable downside risks.”

“Not anticipating further large net foreign exchange interventions by the central bank.”

“Believing the policy interest rate easing cycle has neared its end in Turkey.”

“Anticipating broad continuity in the policy response to managing the balance of payments pressures.”

“Resumption of Turkish government external debt issuance, lighter redemption profile in the second half of 2020 to have some stabilising effect on external position.”

“Should external pressures become much more acute, policy response would be more uncertain.”

Market reaction

The USD/TRY pair largely ignored these remarks and was last seen gaining 0.35% on the day at 6.8723.