The Turkish Lira lost 1.5% value against the USD this morning and was traded at 6.3870.

On Tuesday evening, credit ratings agency Moody’s downgraded the credit ratings of 18 banks and 2 financial institutions.

In a note the agency published, Moody’s stated that there is “a heightened risk of a downside funding scenario” and loss of value for the Turkish Lira. The note added: “A deterioration in investor sentiment limits access to market funding.”

The agency had downgraded Turkey’s rating to a “BA3” with a negative perspective in mid-August and thinks that Turkish banks are fragile because they are “highly reliant on foreign currency funding”.

Moody’s stated that the passive assets need constant refinancing and thus the Turkish banking systems are extremely susceptible to changes in potential investments.

The note stessed that foreign currency wholesale bonds and syndicated loans worth some 77 billion USD will have to be refinanced in the next 12 months.

Moody’s said the downturn in the Turkish economy feeds inflation and threaten growth, and foresaw 1.5% growth for 2018 and 1% for 2019.

The note said Turkey’s operational framework has deteriorated beyond estimates and that the downturn will continue.

The Turkish Lira has lost 40% of its value against the USD since the beginning of the year, while this month’s losses were recorded at 24%.

Meanwhile, the economic trust index fell by 9% in August compared to the previous month according to TUIK data.