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Economic gloom fuels flight from Turkish lira

The Turkish government slammed Moody’s for downgrading Turkey’s credit rating, but its own citizens are increasingly fleeing the Turkish lira for the safety of hard currencies.

ANKARA, Turkey — On March 7, the international credit rating agency Moody’s downgraded Turkey’s sovereign rating from Ba1 to Ba2, which is two grades below “investment grade.” Not surprisingly, the move unleashed furious reactions by the Turkish government, including President Recep Tayyip Erdogan.

Finance Minister Naci Agbal argued that Moody’s decision was political and contradicted Turkey’s economic realities, and he even threatened legal action against the company. Speaking at a public event March 10, Economy Minister Nihat Zeybekci said, “In one of the European Union member countries, nonperforming loans amount to more than 60% of gross domestic product. In Turkey, the ratio is not even 3%. Yet [Moody’s] downgrades Turkey’s rating, while raising theirs. This is nothing but an opportunistic attempt to push up Turkey’s credit costs. This is a usurer mentality … the mentality of the usurer’s hitman.”

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