Turkey's lira crashed as much as 7% to a record near 15 to the dollar on Monday, gripped by worries over President Tayyip Erdogan's risky new economic policy and prospects of another rate cut, prompting the central bank to intervene again.
Late on Friday, ratings agency S&P affirmed Turkey's long-term foreign currency rating at "B+" and revised its outlook to negative on an uncertain policy direction amid rising external risks.
Turkey's 5-year credit default swaps nudged 1 basis point higher to a one-week high of 503 basis points, according to IHS Markit data. Erdogan has repeatedly advocated for rate cuts as he promotes a new economic plan prioritising economic growth, credit, production and exports, despite widespread criticism of the policy from economists and opposition politicians.
"There is an element of concern about what the economic plan is, and how closely aligned it would be to engaging with the private sector. There is a lack of clarity around that," said Khush Choksy, the U.S. Chamber's senior vice president for international development and for the Middle East and Turkey.
"U.S. companies do have questions about how Turkey will handle the current short-term crisis and get on to the path of long-term growth that it enjoyed for a long period," he said in an interview.Additional reporting by Karin Strohecker and Marc Jones Writing by Daren Butler Editing by Kirsten DonovanSubscribe for our daily curated newsletter to receive the latest exclusive Reuters coverage delivered to your inbox.
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