Investing.com - The Turkish lira weakened on Monday after the country’s credit rating was cut further into junk territory on Friday and following reports of shots being fired at the U.S. embassy in Ankara.
USD/TRY was up 1.38% to 6.1007 by 06:25 AM ET (10:25 AM GMT). The lira has recovered from the record low levels of around 7.2 per dollar that it reached just over a week ago but is still down around 23% for the month to date.
Both Standard & Poor’s and Moody’s downgraded Turkey’s sovereign credit rating on Friday amid a currency crisis in the country.
S&P cited “extreme lira volatility” while Moody’s warned of “further weakening of Turkey’s public institutions and the related reduction in the predictability of Turkish policymaking.”
Market watchers were also keeping an eye on developments after shots were fired at the U.S. embassy in Turkey’s capital on Monday, causing no casualties.
Deteriorating relations between the U.S. and Ankara and worries about Turkish President Tayyip Erdogan's increasing control over monetary policy and the economy have seen the lira tumble more than 40% this year.
The drop in the lira has roiled financial markets amid fears over companies’ exposure to the Turkish currency and economy.
Sentiment toward Turkey stabilized somewhat following action by the country’s authorities last week to make it more difficult for foreign investors to bet against the lira, along with a renewed vow from Turkey’s finance chief not to employ capital controls.
Turkey’s financial markets are to close early for a half-day holiday on Monday and will remain for holidays for the rest of the week.