Fitch Ratings emphasized the improvement in Turkey's foreign exchange reserves.

Important Statements from Fitch Ratings

Fitch Ratings held the "Fitch Turkey Event" in Istanbul, attended by senior analysts from the "Sovereigns", "Corporates", "Financial Institutions", and "Sustainable Finance" divisions. In his speech, Fitch analyst Douglas Winslow emphasized that Turkey's foreign exchange reserves and external financing situation played a crucial role in last year's rating upgrades.

Significant Improvement in Foreign Exchange Reserves

Winslow noted that foreign exchange reserves have risen to 180 billion dollars, compared to 100 billion dollars in 2023, stating, "The quality of the reserves has also significantly improved. Excluding swap transactions with domestic banks, we are observing a rapid increase in foreign exchange reserves when looking at a broader measure."

Optimistic Predictions for the Future

Praising the speed of reserve growth, Winslow expressed that this increase will continue over the next two years, although at a slower pace. He also pointed out Turkey's external financing needs, saying, "This is a risk, but banks and companies are able to renew their external debts even during stressful periods. This shows that external financing flows are stable."

Fitch's External Financing Assumptions

Winslow stated that Fitch anticipates some additional capital inflow to Turkey but noted that the current account deficit may show a slight increase. He also mentioned that they do not expect a significant decrease in the rate of dollarization.

Policy Risks and Rating Outlook

Winslow emphasized that the greatest risk could be an excessively loose monetary policy and noted that Fitch's ratings have a medium-term perspective. "Last year, we upgraded Turkey's rating twice, bringing it back to the pre-crisis level, that is, to BB-," he said.

Finally, Winslow expressed strong confidence that current policies would be maintained, forecasting that the real policy interest rate would still be positive in the coming year, expected to remain around 3%.