Fitch downgrades Turkey to 'BB'; outlook negative

Eren Sengezer FXStreet

Fitch Ratings announced that it downgraded Turkey's note to BB and added that the outlook was 'negative.'

Key highlights from the report (via Reuters)

Downgraded Turkey's long-term foreign-currency issuer default rating (IDR) to 'BB' from 'BB+'.
Turkey's economic policy credibility deteriorated in recent months; initial policy actions after elections in June heightened uncertainty.
Downside risks to Turkey's macroeconomic stability have intensified due to widening in current account deficit.
Downside risks to Turkey's macroeconomic stability have intensified also due to jump in inflation, among others.
Tougher financing conditions and a weaker economy will likely hit performance of the banking sector.
Sustained reduction of turkey's inflation would need increase in credibility, independence of monetary policy, tolerance of period of weaker economic growth.
Composition of ruling coalition suggests progress toward the resolution of the conflict in the south-east is unlikely.
Political and geopolitical risks weigh on Turkey's ratings and world bank governance indicators have fallen below 'BB' median.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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