Fitch boosts Turkiye

Fitch Ratings said it upgraded the government of Turkiye's long-term foreign-currency issuer default rating to B+ from B.

“The upgrade reflects increased confidence in the durability and effectiveness of policies implemented since the pivot in June 2023, including greater-than-expected frontloading of monetary policy tightening, in reducing macroeconomic and external vulnerabilities. Inflation expectations have eased, and external liquidity risks have moderated, reflected by more favorable external financing conditions, higher reserves, lower FX-protected deposits and a narrowing current account deficit,” the agency said in a press release.

Fitch noted Turkiye hiked its international reserves to $131 billion at the beginning of March from $99 billion in June. The agency forecasts international reserves will increase to $148 billion by the end of 2024 and to $159 billion by the end of 2025.

However, high inflation persists at an average of 58% in 2024 though Fitch said it sees it declining to 40% by the end of the year.

The outlook is positive.

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