ISTANBUL: Turkish assets slipped Friday after Fitch Ratings affirmed Turkey’s credit rating but said the economy remained vulnerable to capital outflows despite delays to U.S. stimulus withdrawal giving some respite. The U.S. Federal Reserve’s plans to scale back its $85 billion of monthly asset purchases, first flagged in May, have triggered huge outflows from emerging economies and hammered Turkey’s financial markets. The lira currency fell to an all-time low against the dollar in September.
Fitch Ratings affirmed Turkey’s credit rating of BBB- with a stable outlook late Thursday.
It said delays to the Fed’s tapering, which had been expected to start in September, had given Turkish policymakers respite but the country remains vulnerable to capital outflows because of a large current account deficit. Fitch forecast the deficit would reach 7.4 percent of GDP by the end of the year.
The main Istanbul share index fell 0.04 percent to 78,815.14 points, but still outperformed the broader emerging markets index, which was down 0.58 percent.
The lira slipped to 1.9848 against the dollar at 9:21 compared with 1.9768 late Thursday.
The 10-year benchmark bond yield rose to 8.60 percent from 8.57 percent also Thursday.
Fitch said Turkey’s “sovereign creditworthiness remains resilient to external shocks,” strengthened by underlying factors such as a sturdy banking system and “dynamic” private sector.
Capital outflows have eased and the lira firmed in the past month since the Fed opted not to trim its bond purchases. Growing expectations that it is unlikely to do so before March have lent more support to markets.
Turkcell shares were up 1.18 percent after Turkey’s largest mobile-phone operator posted net income of 699 million lira on sales of 2.98 billion lira in the third quarter.
Turkish lender Garanti rose 0.25 percent after posting an 11 percent drop in its third-quarter net profit, but still higher than expectations, as higher interest rates hemmed in loan growth.