The Turkish economy has entered serious turbulence, stoked by the outcome of the US presidential elections and the prospect of a rate hike by the US Federal Reserve in December. In the most glaring manifestation of the upheaval, the Turkish lira has nosedived against the dollar.

The depreciation of the Turkish lira has outstripped the slump in the currencies of other emerging economies and remains far from being contained. Over the past month, the Mexican peso and the Turkish lira have suffered the worst free falls against the greenback. In Brazil, rated the riskiest emerging economy, the real has been the biggest loser, after the Turkish lira. The currency of South Africa, a country neck and neck with Turkey in terms of risk, and the currencies of other fragile economies, including Russia and Indonesia, have also lost value, but not as much as the Turkish lira.

In Turkey, indebted private companies face the greatest risk from the appreciated dollar, which threatens devastating blows. The Turkish Central Bank closely monitors the dollar assets and liabilities of nonfinancial companies and issues monthly reports on their deficits. According to August data, the foreign exchange liabilities of those companies totaled $311 billion, while their foreign exchange assets — for example, deposits, investments and dues abroad — were worth about $100 billion. In other words, Turkish private companies had a net foreign exchange debt of $211 billion.

Before Turkey’s credit rating was cut to “junk,” the dollar traded at 2.96 Turkish liras. In the past month and a half, and especially after the US presidential elections, it has risen fast, climbing to 3.4 Turkish liras. Accordingly, the $211 billion net debt of private companies, which equaled 622 billion Turkish liras, now stands at 717 billion Turkish liras. This means these companies have incurred losses of 95 billion Turkish liras, or $25 billion, merely through an exchange rate difference. To better illustrate the magnitude of the damage, one should recall that the market value of Turkey’s largest industrial enterprise, the TUPRAS oil refinery, owned by the Koc business empire, is $5 billion, meaning that the said losses amount to five TUPRASes.