Currency substitution

Standard & Poor's (S&P) has confirmed Türkiye's credit rating as "B" and changed its credit rating outlook from "stable" to "positive."

"Confidence in our medium-term program is increasing," Treasury and Finance Minister Mehmet Şimşek wrote on social media platform X on Dec.1, commenting on S&P's move.

Moody's Investors Service has changed its outlook to stable for Turkish banks, saying that for the Turkish banking system is stable as operating conditions improve following the elections.

The government's initial steps to return to orthodoxy in policymaking following the elections in May is supportive of operating conditions for Turkish banks, the rating agency said in a new report.

The United States of America itself is to blame for the fact that many countries began to give up trade in US dollars, Alexei Mozhin, Russia's representative at the International Monetary Fund, told "RIA Novosti".

FX-protected deposit accounts that were launched some nine months ago have attracted more than 1.3 trillion Turkish Liras of savings, Treasury and Finance Minister Nureddin Nebati has said.

Having more lira assets and deposit accounts with longer maturity are crucial both to investments and loans, Nebati said.

Inflation in Turkey is estimated to decline to 15.5% this year and 12% next year, the global rating agency Fitch Ratings said on June 10.

Interest rate is expected to be 17% at the end of 2021 and 13.5% at the end of 2022, according to a webinar titled "Fitch on Turkey: A Sovereign and Financial Institutions Overview".

Fitch Ratings revised on Feb. 19 Turkey's outlook to stable from negative, and affirmed its credit rating at 'BB-'. 

"Monetary policy has been significantly tightened, international reserves have stabilized and the Turkish lira has appreciated by 18% against the US dollar since early November," the global rating agency said in its statement.

With the stabilization of capital inflows and reversal of dollarization trend in deposit/participation funds, the Turkish Central Bank will increase its reserves through auctions, the governor said on Feb. 9. 

"When the conditions are mature enough, we will share our plan for this with the public in an open and transparent manner," Naci Ağbal told a meeting with economists.

Turkish Central Bank Gov. Naci Ağbal said the economy has lost some pace recently but signs that Turks are shifting toward lira assets suggests a reversal in dollarization may come.

"We are working day and night to achieve lasting price stability," Ağbal told Reuters in an interview.

"We know we are in a difficult period."

The Central Bank of Turkey (CBRT) submitted an open letter to the government on Feb. 2 explaining why annual inflation was higher than the country's target range last year.

Turkey's annual inflation rate was 14.6% in December 2020, remaining outside the uncertainty band around the 5% target.

In a new measure aiming to curb Turkish Lira's decline, the Central Bank has decided to allow exporters to repay foreign currency-denominated loans in the local currency.