The threat of Turkey’s debt being returned to junk by Moody’s Investors Service risks arresting a 2 1/2-month rally by the lira, countering the improvement in the nation’s current-account deficit amid a pick-up in exports.
Turkish lender Yapi & Kredi Bankasi AS says companies would struggle to repay foreign-currency debt were the lira to depreciate at least 20 percent, a level Goldman Sachs Group Inc. predicts it will approach next year.
Morgan Stanley says the Turkish central bank will raise interest rates today, a move that could prove futile for bolstering the tumbling lira given risks the graft crisis embroiling the government will escalate.
Turkey’s benchmark yields climbed for the first time in five days and the lira depreciated against the dollar as Goldman Sachs Group Inc. said pressure on the economy may continue given the nation’s external imbalances.
The shekel may advance 12 percent against the dollar in the next year as Israel’s economy expands and the dollar weakens as the Federal Reserve steps up asset purchases, Goldman Sachs Group Inc. said. Bonds dropped.
Hungary is eastern Europe’s “most puzzling investment case” with assets trading at the biggest discount to fair value in the region because of the government’s economic policies, economists at Goldman Sachs Group Inc. said.