So what happens if we convert that dollar to Chinese Yuan? We end up with This means that the dollar is a stronger currency. As a side note, China is notorious for keeping the value of their currency low in order to encourage exports and this is a a mini example of how that makes sense.
The foreign currency bond ceiling remains at Baa3; its foreign currency bank deposit ceiling remains at Ba3 and its local currency country ceilings for bonds and bank deposits remain at Baa2. The short-term country ceilings also remain unchanged at Prime-3 P-3 for foreign currency bonds and Not Prime NP for foreign currency bank deposits.
The erosion of confidence was triggered in part by the advancement of presidential and parliamentary elections to 24 June, 17 months ahead of schedule.
That decision exacerbated existing investor concerns regarding the negative credit impact of the economic, fiscal and monetary policy settings, and heightened concerns that the next administration would move further down the path of policy options detrimental to economic and financial stability.
The current account deficit has widened to an estimated 6. Also since then, the cost of bank funding has risen sharply. Even if the current account deficit narrows in the second half of the year due to the impact of the weaker lira and a slowdown in domestic demand, the deficit will remain large in absolute and relative terms.
The period since the failed coup in has seen increasingly expansionary fiscal policy that has stimulated growth to unsustainable levels. Longer term economic reforms intended to raise potential growth and to reduce external vulnerabilities to a large extent have been sidelined, given the political focus on the several election cycles the country experienced in recent years.
Most recently, although not for the first time, the focus has been on monetary policy. The central bank had to take additional steps in the subsequent days to take the pressure off the lira, which culminated in the credit-positive simplification of the monetary policy regime to take effect on 1 June, a reform that had been pledged in the past but never implemented.
The latter move involved more than doubling the various policy rates that had gone unused for more than a year and also included another hike in the LLW rate to The currency firmed marginally on the news, with market attention still focused on the next MPC meeting on 7 June.
Turkey has seen, and has managed, serious economic and financial shocks before. These circumstances partly reflect fundamental credit strengths derived from a large and diversified economy and a still relatively strong fiscal position. At present, the fact that economic and financial vulnerabilities are rising in parallel with an increasingly unpredictable political situation and rising global interest rates heightens the threat.
Finally, the agency will seek to understand the policy-formulation process, given that after the elections the person elected president will have significant authority over the legislative and judicial branches of government, and could potentially also exert greater influence over the legally independent central bank.
Given the review for downgrade, an upgrade is highly unlikely in the near future. Moderate level of economic resilience Default history: On 30 Maya rating committee was called to discuss the rating of the Turkey, Government of. The main points raised during the discussion were: The issuer has become increasingly susceptible to event risks, in particular external vulnerability risks.
The principal methodology used in these ratings was Sovereign Bond Ratings published in December Please see the Rating Methodologies page on www. The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.
For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating.
For any affected securities or rated entities receiving direct credit support from the primary entity ies of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Historical Data from the Economist’s Big Mac Index.
An acronym is an abbreviation coined from the initial letter of each successive word in a term or phrase. In general, an acronym made up solely from the first letter of the major words in the expanded form is rendered in all capital letters (NATO from North Atlantic Treaty Organization; an exception would be ASEAN for Association of Southeast Asian Nations).
Purchasing Power Parity Explained.
If you have spent any amount of time with the Big Mac Index, then you have certainly come across the term “Purchasing Power Parity”. This entry is concerned with extreme poverty. The World Bank is the main source for global information on extreme poverty today and it sets the International Poverty Line.
The poverty line was revised in —since then, a person is considered to be in extreme poverty if they live on less than international dollars (int.-$) per day. The Big Mac Index is published by The Economist as an informal way of measuring the purchasing power parity (PPP) between two currencies and provides a test of the extent to which market exchange rates result in goods costing the same in different countries.
It "seeks to make exchange-rate theory a bit more digestible". The index, created in , takes its name from the Big Mac, a hamburger. The Office of Public Affairs (OPA) is the single point of contact for all inquiries about the Central Intelligence Agency (CIA).
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