JCR removes Turkey’s ration from credit monitor, citing lira recovery and ease in ties with US

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Credit rating agency JCR has removed Turkey’s ratings from the Credit Monitor and affirmed them at BBB- with a negative outlook, citing a recent recovery in the lira’s value and an ease in the Turkish-U.S. ties.

In a statement on Nov. 27, the agency also mentioned an improvement in the country’s current account balance as a main reason behind its move.

After the growing tension between the U.S. and Turkey over the country’s detention of an American pastor had sent the lira crashing in value, the agency on Aug. 14 placed Turkey’s issuer and bond ratings under Credit Monitor with negative direction and has been examining the impact of the currency’s plunge on its economy and public finance.

Following the placement of the Credit Monitor, the lira has been somewhat recovering thanks to the policy rate hike and the improvement of the relationship with the U.S., the agency said.

Turkey’s external balance has been improving with its current account balance turning to positive on a monthly basis due to declining imports, amid its economic slowdown. In addition, the government debt outstanding will stay within a restrained level of below-35 percent level at the end of 2018 although it has been affected by the lira’s fall and the increase in interest payments,” it noted.

Meanwhile, the country’s foreign reserves have been declining while its external financing needs remain high and its refinancing has been facing downward pressure amid remaining uncertainty over the government’s policy and external environment, according to the agency.

“All these considered JCR has removed the ratings from the Credit Monitor and affirmed them with negative outlook,” it said.

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