Moody’s: Turkish forex reserve fall credit negative

The US-based rating agency, Moody’s Investor Service, is out with a credit review report on Turkey, citing that the erosion of Turkey’s foreign currency reserves is credit negative.

Additional Points (courtesy Reuters):

“Intervention to support the lira is contrary to the central bank’s longstanding policy to allow the exchange rate to float freely and poses renewed questions about the transparency and independence.” 

The renewed slip in Turkey’s financial markets and uncertain policy reaction to recession raises a risk of further capital flight.

The results of local polls will likely determine the future path of macroeconomic policy.

“This weekend’s municipal elections results will likely determine the future path of macroeconomic policy and therefore whether the latest market shock persists or dissipates.”