Morales: Reverse Dollarization Has Begun in Turkey

Erich Arispe Morales, Senior Director of Fitch Ratings, said, “Reverse dollarization has begun in Turkey.”

Erich Arispe Morales, Fitch Ratings Senior Director, spoke to Bloomberg HT channel regarding the credit rating outlook change. International credit rating agency Fitch Ratings, while affirming Turkey's credit rating as "BB-", changed its credit rating outlook from "negative" to "stable". Erich Arispe Morales, Senior Director of Fitch Ratings, who made evaluations on the issue for Bloomberg HT channel, said, “At the end of last year, the situation was as follows: Investors' confidence decreased and there was pressure on the Turkish Lira. We saw a return to orthodox policies and a tightening in monetary policy. Turkey has surpassed 6 percent in real interest rates, and the new economic team has made policies more predictable. Now there is a simplified monetary policy and the communication strategy has been improved.”   Turkey is Financially Well Positioned Compared to BB Countries Giving information that the external financing risks are now reduced, Morales said: “Clarity is very important to establish policy credibility. Turkish officials highlight: reducing inflation sustainably, increasing reserves and reversing dollarization. We will track how much progress has been made on these issues, and we will examine whether the inflation target of 5 percent has been achieved.” Pointing out that reverse dollar substitution has started to be seen in the current situation, Morales stressed that the dollarization has increased over the years. Saying that Turkey is in a good financial position compared to the countries in the BB category, Morales said, "When we look at the last year, Turkey's budget deficit was one of the lowest among the BB countries. " In addition, Morales stated in his credit note that for an additional improvement, external sensitivities should be reduced and external financing should be increased.