Moody's upgraded Türkiye, now what? Moody’s upgraded Turkiye’s credit rating two notches from B3 to B1 last Friday (19 July). With this upgrade, Türkiye is now rated at the same level (four notches below investment grade) across the major credit rating agencies, with a positive outlook. This may not yet be enough to attract all types of investors, nor change Turkiye’s weight in portfolios overnight, but clearly it is further confirmation that Türkiye is heading in the right direction.
The CBRT is more confident that inflows will continue. The Turkish central bank terminated FX swaps with local lenders via the quotation method. Authorities have been using these swaps to lend TRY to financial institutions in return for FX. The CBRT also decided to return a USD5bn deposit from Saudi Arabia, following the improvement in its reserves. Strengthening foreign investor sentiment since last year’s presidential election has led to strong demand for Turkish assets and stabilised the TRY.
A very light agenda to watch next week. Economic confidence (July, previous 95.8), trade balance (June, previous -USD6.5bn), foreign tourist arrivals (June, previous 14% YoY) and manufacturing PMI (July, previous 47.9). None of these data should have any effect on the markets.