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Fitch Cuts Turkey’s Credit Rating with a Negative Outlook

Fitch Cuts Turkey’s Credit Rating with a Negative Outlook

Sunday, 14 July, 2019 - 11:00
A money changer counts Turkish lira banknotes at a currency exchange office in Istanbul, Turkey August 2, 2018. REUTERS/Murad Sezer

Credit rating agency Fitch downgraded Turkey’s sovereign debt by one notch on Friday in a move that comes following Moody's lowering of its credit rating for Ankara in June.

The move also came less than one week after Turkish President Recep Tayyip Erdogan dismissed the country’s central bank chief from his post.

Fitch cited Murat Cetinkaya’s dismissal in its decision to cut Turkey’s long-term debt rating deeper into junk territory, to BB- with a negative outlook.

“The firing of the central bank governor . . . risks damaging already weak domestic confidence (evidenced by rising dollarisation), jeopardising the inflow of foreign capital needed to meet Turkey’s large external financing requirement, and worsening economic outcomes,” Fitch said.

It added: “The move adds to uncertainties over the prospects for structural reforms and management of the public sector finances.”

Earlier in June, Moody’s lowered its credit rating for Turkey to B1, bringing it in line with Standard & Poor’s rating of B+.

The Turkish lira was about 0.8 per cent weaker against the dollar at 5.7199 after Fitch’s move.

Also, Turkey raised its main rate to 24 per cent in September 2018 in reaction to a steep drop in the value of the lira and in light of inflation.

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