FILE PHOTO: Turkish Deputy Prime Minister Mehmet Simsek speaks during a television interview after IMFC plenary the IMF/World Bank spring meeting in Washington, U.S., April 20, 2018. REUTERS/Yuri Gripas
June 2, 2018
ISTANBUL (Reuters) – Turkey defended its economic policies on Saturday, a day after Moody’s placed the country’s rating on review for a downgrade and Fitch said it was monitoring its banks.
Turkey has tightened and simplified its monetary policy and introduced macro prudential measures, Deputy Prime Minister Mehmet Simsek said on Twitter. Work was in progress to further strengthen the policy mix, tightening fiscal policy via spending cuts, he added.
The Turkish currency <TRYTOM=D3> has tumbled some 20 percent this year on deepening concern about President Tayyip Erdogan’s grip on monetary policy after presidential elections this month.
Moody’s, which had already downgraded the country’s rating in March, announced on Friday that it would review Turkey’s Ba2 rating for a downgrade, citing concern over economic management and erosion of investor confidence.
“The negative shift in investor sentiment is a significant challenge for a country that is deeply dependent on net capital inflows,” Moody’s said, adding that the authorities were unable to fully address country’s structural economic problems.
Separately, Fitch said it would place 25 Turkish banks’ ratings on watch negative, including listed lenders such as Yapi Kredi Bank <YKBNK.IS>, Akbank <AKBNK.IS> and Garanti Bankasi <GARAN.IS>.
“The RWNs (Rating Watch Negative) placed on all Turkish banks’ VRs (Viability Rating) reflect risks to their performance, asset quality, capitalization and, in most cases, liquidity and funding profiles following a recent period of increased market volatility,” Fitch said in a statement.
The central bank hiked the interest rate by 300 basis points to 16.50 percent in an emergency meeting last week to prop up the lira, which has hit a record low of 4.9290 against dollar.
(Reporting by Ezgi Erkoyun; Editing by Peter Graff)
