S&P downgrades Turkey, warns on "polarization," as lira sinks lower

Ratings agency Standard and Poors downgrades Turkey's credit rating by one notch - taking the foreign currency rating to BB from BB-plus - following the failed coup attempt and the subsequent purges of state institutions.

"We believe the polarization of Turkey's political landscape has further eroded its institutional checks and balances," the agency says, putting its outlook to "negative."

"We expect a period of heightened unpredictability that could constrain capital inflows into Turkey's externally leveraged economy," the statement says, adding that the outlook could be revised if the "independence of key institutions was not eroded."

The lira dropped further, to 3.07 to the dollar. Prior to the failed coup, the Turkish currency was trading at about 2.85 to the greenback.

Last update: Wed, 20/07/2016 - 19:06
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