On August 11, 2018, the Turkish lira plummeted. The lira has continued to depreciate severely since 2018, with the largest decline of more than 50% this year. The exchange rate risk has rapidly escalated recently. Turkey’s market foundation is fragile, with a high proportion of foreign debt and insufficient overall market confidence. Its domestic political turmoil, persistent high inflation, diplomatic conflicts involving counter-terrorism, and Trump’s announcement of double tariffs on steel and aluminum have caused Turkey to suffer large fluctuations in financial markets such as exchange rates, bonds, and stocks.
In the first half of 2018, the Brazilian real experienced a sharp depreciation, and the exchange rate against the US dollar fell from 3.2 at the beginning of the year to around 3.9 at the end of June, a drop of more than 20%.
The top ten risk currencies in emerging markets in 2018 include Venezuelan Bolivar, Argentine Peso, South African Rand, Turkish Lira, Brazilian Real, Mexican Peso, Indian Rupee, Vietnamese Dong, Indonesian Rupiah, and Belarusian Ruble.
Currency depreciation will lead to reduced imports, reduced orders, and customer refusal to pay in these countries.