Credit rating agency Moody’s downgraded Turkey’s rating to B3 from B2 on Friday, changing its outlook to stable from negative, Bloomberg reported.
The country’s current account deficit will likely exceed expectations by a wide margin, Moody’s said, increasing external financing needs amid a tightening of global financial conditions.
The agency puts its expectation of Turkey’s current account deficit at 6 percent of the gross domestic product this year, tripling its figures from before Russia’s invasion of Ukraine.
Attempts to stabilise the lira and restore foreign currency buffers result in “increasingly unorthodox measures” that remain unlikely to be effective in restoring stability, Bloomberg cited analysts Kahtrin Mühlbronner and Alejandro Olivo as saying.
Hard-currency reserves have been declining for most of the year in the country, Moody’s said. Turkey continues to import energy at high prices, and its revenue from exports and tourism is fading, it added.
As commodity costs soared and the Turkish central bank continued its reluctance to raise interest rates, Turkey’s inflation skyrocketed to its highest in decades, likely to end the year at more than 70 percent.
The lira, losing more than 25 percent of its value against the dollar this year, is the worst among 23 emerging market currencies that Bloomberg tracks, the business focused network said.