Moody’s downgrades Turkey’s credit rating to B3

Ratings agency Moody's on Friday cut Turkey's sovereign credit rating to "B3" from "B2", citing rising balance of payment pressures and risks of further declines in the country's foreign-currency reserves.

"Authorities are having to resort to increasingly unorthodox measures in an attempt to stabilize the currency and restore foreign-currency buffers," Moody’s said in its report.

According to Moody's, surging energy prices, which are pushing up already high inflation and raising external financing needs, mounted pressure on the country's external position. 

Declines in foreign-currency reserves also exercise pressure, Moody's said. 

"(The) current account deficit will likely exceed earlier expectations by a wide margin, raising external financing needs at a time of tightening financial conditions globally," the agency said in its statement.

The agency also mentioned Turkey’s annual 79.6 percent inflation, among the highest levels reported globally and Turkish lira’s depreciation of 30 percent against the U.S. dollar this year.

Moody's said it was raising its outlook of Turkey to stable, reflecting its view that the risks at the B3 level are balanced.