Turkey outlook was revised to negative from stable by Fitch Ratings, which said that factors including a decline in foreign-exchange reserves and weak monetary policy credibility have “exacerbated external financing risks.”
The ratings company affirmed Turkey’s credit score at BB-, three levels below investment grade. That’s on par with Brazil, Jordan and Armenia.
Turkey’s central bank has been running down foreign-exchange reserves to contain the lira’s slide, while unwinding measures that flooded the market with credit. It’s also left interest rates at levels below inflation, opting instead to tighten liquidity by relying on less conventional methods to increase borrowing costs.
Foreign-currency reserves dropped to $45.4 billion as of Aug. 14 from $81.2 billion at the end of last year.
