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S&P Global Ratings lowered its outlook on Turkey from “stable” to “negative” on Friday, citing vulnerabilities stemming from the country’s low policy rates, directed lending and regulatory control over foreign currency positions and interest rates, Reuters reported.
Turkey is struggling with rising prices for goods and services, and inflation is expected to remain high leading up to the May 14 presidential and parliamentary elections due to a devastating earthquake in February.
Turkey’s central bank cut its main interest rate to 8.5 percent on Feb. 23.
S&P expressed concern over Turkey’s sizable current account deficits, limited usable reserves, high inflation and dependence on sporadic capital inflows, stating that the outlook for the exchange rate is uncertain at best. The ratings agency maintained Turkey’s sovereign credit rating at ‘B.’