Growing Risk of Increased Capital Controls in Turkey – S&P Global

A woman holds Turkish lira banknotes in this illustration taken May 30, 2022. REUTERS/Dado Ruvic/Illustration

LONDON, June 8 (Reuters) – There is a growing risk that Turkey will introduce additional capital controls if pressure on its currency and financial markets continues to escalate, ratings firm S&P Global said on Wednesday.

The Turkish lira has fallen 22% this year, raising fears that the country is heading for a repeat of the currency crisis seen at the end of last year. Read more

One of S&P’s top sovereign analysts, Maxim Rybnikov, said in an online presentation that S&P’s decision in April to downgrade Turkey’s local currency also reflected concerns about additional capital controls.

“It’s not the baseline yet, but I think the risk is increasing,” Rybnikov said.

Another S&P analyst added that the lira’s fall meant asset quality issues would eventually ’emerge’ in Turkey’s banking sector, while the pace of tourism’s recovery had been one of the few positive surprises. .

(Reporting by Marc Jones, editing by Rodrigo Campos)

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