The lira plunged to a record low after S&P downgraded Turkey

The Turkish lira is collapsing after news that S&P downgraded Turkey.

The lira collapsed to a low of 3.0945 per dollar – a new all-time low – around 12:56 p.m. ET.

It is down by 1.5% at 3.0844 per dollar around 1:14 p.m. ET.

source
Investing.com

S&P downgraded Turkey to BB from BB-plus and changed the country’s outlook to negative.

“Following the attempted coup in the Republic of Turkey on July 15, webelieve the polarization of Turkey’s political landscape has furthereroded its institutional checks and balances,” the S&P noted.

“In addition, we expect a period of heightened unpredictability that couldconstrain capital inflows into Turkey’s externally leveraged economy,” it added.

Notably, Turkish president Recep Tayyip Erdogan will chair a meeting today of the National Security Council and then will announce an “important decision.”

“Markets have reacted badly to the ongoing purges of the judiciary, military, police, and academia. If Erdogan announces more draconian measures, we suspect that USD/TRY (which made a marginal new high for this move) will likely make new all-time highs,” argued Chandler earlier this morning.