LONDON (Reuters) – The Turkish lira’s move towards the 8-to-the dollar mark will compound its 25% slide this year, amplifying existing pressures on companies and the broader economy.
Below are three charts illustrating the pressure points for Turkey, where the currency is enduring its eighth straight year of losses, having lost more than 80% of its value in the past decade.
1/ PRIVATE SECTOR FX DEBT
Turkey’s external public debt burden is deemed manageable but its companies and financial institutions face hefty repayments of nearly $10 billion in the next two months.
“Further lira depreciation would distort corporate balance sheets more and thus would have negative impact on investment prospects,” said Ugras Ulku, head of emerging Europe research at the Institute of International Finance (IIF).
More currency weakness would constrain companies’ ability to increase