Fitch Says Türkiye Needs Higher Reserves for BB- Upgrade as Inflation Eases to 32.1%
Updated
Updated · Daily Sabah · Jul 21
Fitch Says Türkiye Needs Higher Reserves for BB- Upgrade as Inflation Eases to 32.1%
2 articles · Updated · Daily Sabah · Jul 21
Summary
Fitch said durable gains in Türkiye’s international reserves are the key condition for any sovereign rating upgrade after it affirmed the country at BB- with a stable outlook last week.
Reserves fell during the U.S.-Israeli war on Iran and have only partly recovered, leaving Fitch focused on whether year-end improvement proves lasting given Türkiye’s high external financing needs.
32.1% annual inflation in June, down from 32.6% in May, signaled a return to disinflation after war-driven energy and supply shocks pushed prices higher in April and May.
Fitch said tight macro policy, a healthy banking sector, access to external financing and steady dollarization around 38% have helped preserve confidence in the lira despite elevated regional political uncertainty.
Morales said Fitch expects the central bank to resume easing later this year if geopolitical risks fade, with total cuts of 200 basis points taking the policy rate to 35% by end-2026.