Moody’s cuts Turkey’s credit rating further

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A man walks out of a currency exchange shop in Istanbul, Thursday, Aug. 16, 2018. Beset by a weak currency and tension with the United States, Turkey is reaching out to Europe in an attempt to shore up relations with major trading partners despite years of testy rhetoric and a stalled bid for EU membership. The overtures by Turkish President Recep Tayyip Erdogan, who has harshly criticized Germany and other European nations in the past, are part of a diplomatic campaign to capitalize on international unease over U.S. President Donald Trump and American tariff disputes. (AP Photo/Lefteris Pitarakis)

ANKARA, Turkey — Ratings agency Moody’s has downgraded Turkey’s credit rating deeper into “junk” status and slapped a “negative” rating on its outlook.

It’s the latest blow to the country whose currency, the lira, has taken a battering amid concerns about fundamental economic problems and a diplomatic and trade dispute with the United States.

Moody’s stripped Turkey of its investment-grade rating in 2016 and Friday’s move lowered it one rung further. The agency says the downgrade was triggered by what it described as a further weakening of Turkey’s public institutions and a related reduction in the predictability of Turkish policy making.

Debt rating downgrades typically mean higher borrowing costs as investors demand steeper interest rates to take on riskier debt.

Moody’s says its negative outlook reflects its expectation that there’s more financial stress likely on the horizon for Turkey.

US President Donald Trump is condemning the detention of an American pastor in Turkey and warned that “we are not going to take it sitting down.”

Trump, before leaving the White House on Friday, denounced Turkey as a “problem for a long time” and said it made up a “phony” spying charge against Andrew Brunson.
Brunson was charged with terror offenses by a Turkish court and has been held since October 2016.

Trump said Turkey has “not acted like a friend.” He demanded Brunson’s release, saying “they can’t take our people.”

The Trump administration has threatened to levy more sanctions against Turkey, a move that has rattled the nation’s financial markets.

Turkey is calling for the US to extradite a Pennsylvania-based Muslim cleric accused engineering a 2016 coup attempt.

Turkey’s state-run news agency says a higher Turkish court has also rejected an appeal for the release from detention of an American pastor who is at the center of a Turkish-US spat.
Anadolu Agency said a high court in Izmir upheld a lower court’s decision earlier this week to keep pastor Andrew Brunson under house arrest. It also rejected an appeal for his travel ban to be lifted, Anadolu reported.

Brunson’s continued detention has aggravated a feud between the NATO allies and has helped trigger a Turkish currency crisis.

US President Donald Trump’s administration on Thursday signaled new sanctions against Turkey over Brunson’s detention and Turkey said it would reciprocate.

Turkey’s currency remains steady against the dollar despite an apparent threat of possible new sanctions by US President Donald Trump.

The Turkish lira stood at 5.80 per dollar on Friday, up about 0.4 percent against the dollar.

The currency has recovered from record lows earlier this week. Investors, already worried about Turkey’s economy, were irked by a diplomatic and trade dispute with the United States over the continued detention of an American pastor Andrew Brunson on espionage and terror-related charges.

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