Turkey: Fitch Ratings upgraded its rating after switching to the traditional economic approach – The Economist Post

Fitch Ratings raised Turkey's credit rating, as the government's return to conventional economic policy reduces risks to the country's financial stability and balance of payments pressures.

Fitch Ratings raised Turkey's credit rating by one notch to “B+” from “B” with a positive outlook, according to a statement issued on Friday, March 8.

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The rating agency's decision “reflects increased confidence in the duration and effectiveness of policies implemented since the shift in economic policy implemented since June 2023, including a greater-than-expected tightening of forward-looking monetary policy, in reducing macroeconomic and external vulnerabilities,” analysts such as the rating agency wrote. Eric Arispi Morales.

Since Fitch raised Turkey's rating outlook to stable from negative on September 9, the country's central bank has raised interest rates by two basis points to 45% and taken additional tightening measures to address inflation that is approaching 70%.

Increase foreign exchange reserves

The central bank's total foreign reserves rose to $80.5 billion as of March 1, from $56.5 billion at the end of May, when the re-election of President Recep Tayyip Erdogan marked the beginning of a policy change. In recent weeks, stocks have been under pressure due to increased demand for foreign currencies.

Policymakers led by Finance Minister Mehmet Simsek called for the rating to be raised, and criticized rating agencies for lagging behind markets in their assessment of Turkey.

In January, Turkey's credit outlook was upgraded to positive from stable by Moody's, which rated the country at “B3”, six notches below investment grade.

Standard & Poor's credit ratings agency raised its country's rating outlook to positive in December, affirming it at 'B'.