Moody’s Upgrades Türkiye’s Ratings to B1 on Tight Monetary Policy

A street vendor waits for customers at an underground passage in Istanbul, Türkiye, July 11, 2024. (Reuters)
A street vendor waits for customers at an underground passage in Istanbul, Türkiye, July 11, 2024. (Reuters)
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Moody’s Upgrades Türkiye’s Ratings to B1 on Tight Monetary Policy

A street vendor waits for customers at an underground passage in Istanbul, Türkiye, July 11, 2024. (Reuters)
A street vendor waits for customers at an underground passage in Istanbul, Türkiye, July 11, 2024. (Reuters)

Ratings agency Moody's upgraded Türkiye’s ratings to "B1" from "B3" on Friday, citing improvements in governance and a tighter stance on monetary policy.

Backed by President Recep Tayyip Erdogan and spear-headed by Finance Minister Mehmet Simsek, Türkiye has been implementing a tight monetary and fiscal policy since last year to tackle soaring inflation. Annual inflation dipped to below 72% last month from above 75% in May, which is seen as the peak.

Türkiye’s central bank has raised its main rate to 50% from 8.5% since Simsek was appointed last year.

The country's central bank has recently said it will maintain its tight monetary policy stance until a permanent decline in inflation is achieved. In June, the central bank reiterated that disinflation would take hold in the second half of the year.

Last month, the international crime watchdog, Financial Action Task Force (FATF), removed Türkiye from its "grey list" of countries that require special scrutiny, in a boost to the country's economic turnaround plan.

Moody's is the first credit ratings agency to announce new ratings for Türkiye following the FATF decision.

Lower current-account deficit and improvement in the central bank's financial position has materially reduced the country's external vulnerability, Moody's said.

"Earlier concerns over rising risks of a full-blown balance of payments crisis - which had triggered successive downgrades to the B3 rating level - have for now dissipated," the agency added in a statement.

The agency also maintained its "positive" outlook on Türkiye, expecting authorities to maintain its tight economic policy stance for longer.



Gold Extends Gains as Trump Tariffs Fuel Safe Haven Flows

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
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Gold Extends Gains as Trump Tariffs Fuel Safe Haven Flows

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo

Gold prices rose for a second straight session on Tuesday, but traded below the recent all-time highs, as uncertainty around US President Donald Trump's tariff plans continued to fuel economic growth concerns and safe haven flows into bullion.

Spot gold gained 0.6% at $2,913.79 an ounce as of 0714 GMT. It hit a record high of $2,942.70 last week.

US gold futures added 0.9% to $2,925.50.

"Trump's disruptive modus operandi, aggressive rhetoric and tariffs - whether actual or threatened - could unravel global trade and intricate supply chains," said Nikos Tzabouras, senior financial writer at trading platform Tradu, Reuters reported.

"With uncertainty surrounding the global economy and the broader geopolitical landscape in the Trump 2.0 era, gold is set to remain a natural beneficiary of risk-off flows and central bank buying."

Since taking office last month, Trump has swiftly redrawn the global trade battlefield with a series of tariffs, while plans are already in motion for sweeping reciprocal tariffs, aimed squarely at any nation that taxes US products.

"Gold continues to benefit from the uncertainty surrounding the US. government's tariff policy. Central bank buying should also continue to provide support, even if there is no new data on this," Commerzbank analysts said in a note.

The market's focus has now shifted to the US Federal Reserve's January meeting minutes due on Wednesday for clues into the central bank's interest rate trajectory.

"Price gains are also supported by growing expectations that the Fed will cut rates in 2025 - a sentiment that gained further traction among traders after last week's disappointing US retail sales figures," Ricardo Evangelista, senior analyst at brokerage firm ActivTrades, said.

Bullion benefits from geopolitical and economic uncertainties, as well as rising price pressures, but higher interest rates diminish the asset's allure.

Spot silver fell 0.9% to $32.50 an ounce. Platinum jumped 0.9% to $985.20 and palladium climbed 1.6% to $978.00.