Fitch Evaluated The CBRT's Change Of Governor

Fitch evaluated the CBRT's change of governor. The organization stated that the change increased the financing risks.

International credit rating agency Fitch discussed the change of president in the Central Bank of the Republic of Turkey (CBRT). The report, signed by Fitch directors Erich Arispe, Douglas Winslow, Paul Gamble and Mark Brown, said, "The change in the CBRT has increased inflation and external financing risks." Noting that the latest decision has damaged the credibility of monetary policy and the expectations of lowering inflation, Fitch emphasized that a sharp decline in the Turkish Lira and uncertainty in policy will bring new pressures on the external financing side in a global environment where risk appetite has decreased. Pointing out that the CBRT's use of instruments other than the policy rate will be perceived negatively, Fitch stated that they will monitor the depreciation in TL. Stating that in order to evaluate the consequences of Naci Ağbal's dismissal, the policy direction of the new CBRT Governor and the change in the foreign position will be taken into account, the organization stated that negative rating sensitivities intensified balance of payments and macroeconomic risks, as a result of an early monetary relaxation, the melting of international reserves and banking and announced that it includes the risks in the real sector. In addition, it was noted in the report that the re-implementation of policies that encourage credit growth would be a negative signal. In the assessment made by Fitch, it was stated that foreign investor outflows and dollarization can increase balance of payments pressures in times of worsening global financing conditions.   This article has contributions of Bloomberg HT.