Fitch Ratings has revised the Outlook on Türkiye’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to Stable from Positive and affirmed the IDR at 'BB-'.
The outlook revision reflects a marked fall in international reserves since the start of the Iran war, with FX interventions by the Central Bank to defend the Turkish Lira estimated in excess of $50 billion, Fitch said late on April 10.
A more protracted conflict would further pressure Türkiye's external finances and inflation, mainly due to its sizeable energy trade deficit, it added.
The ratings are supported by Türkiye’s large and diversified economy, low government debt, record of sustaining access to external financing through periods of stress, and its resilient banking sector, said Fitch.
It noted that the Central Bank raised the cost of funding by 300 basis points on March 1 by switching liquidity to the overnight lending rate (40 percent).
“We project monetary policy will remain fairly tight this year, with a real policy interest rate of 5.5 percent (ex-post) at year-end, before loosening to 2 percent at end-2027,” it said.
Fitch forecasts inflation to fall to 27 percent at end-2026 (an upward revision of 2 percentage points) and 21 percent at end-2027, from 30.9 percent in March.
Fiscal support through reactivation of the sliding fuel-price mechanism absorbs around two-thirds of the passthrough from higher energy prices, it noted.
The next scheduled review date for Fitch's rating on Türkiye is July 17, 2026.
