Report analysts: Devaluation will continue in Turkey

Baku. 6 October. REPORT.AZ/ Foreign currency reserves of Turkey's Central Bank declined by 4.1% in September 23-30 and made 99 bln USD. 

Report informs citing the Hurriyet daily, decrease in foreign exchange reserves amounted to 4.3 bln USD. Turkey's gold and foreign exchange reserves in the reporting week fell by 4.1 bln USD or 3.4% and amounted to 117.8 bln USD. The cause of the decline in foreign exchange reserves associated with decline factor of bank and treasury accounts in Central Bank.

Notably, credit ratings agency Moody’s Investor Service has downgraded Turkey’s sovereign credit rating to non-investment grade in September.

On the other hand strengthening the possibility of Fed's discount rate increase by year-end and news from the European Central Bank on monetary expansion drove US dollar exchange rate against Turkish lira to 3.07 TRY / USD. Notably that the record level of this exchange rate has been fixed on July 20 (3.10 TRY/USD).

Analytical Group of Report predicts, downgrade in Turkey’s sovereign credit rating by Moody's will have negative impact on foreign investments, especially portfolio investments. Thus, the decline in the foreign exchange reserves of the country's happened due to investors who sold country's financial assets, stocks and bonds and turned it to foreign currency. This trend will continue until the end of the year and the exchange rate is likely to rise to 3,25-3,30 TRY/USD. The main stock index - BIST-100 expected to decrease by 15% up to 66 000.

According to the analysts, Turkish lira's slump will have a negative impact on the currencies of developing countries, in particular, Russian ruble which is the currency of one of the country's main trading partners. It is predicted to decline in order to maintain the competitiveness. Decline in national currencies of both countries most likely will affect Azerbaijani manat.