Turkey was cut deeper into junk territory by Fitch Ratings, which cited the nation’s widening current-account deficit, rising inflation and declining economic policy credibility, Bloomberg reported. The lira slid 0.2%, extending its biggest weekly decline since the global financial crisis, after the ratings company lowered the nation’s long-term sovereign debt rating to BB from BB+ on Friday. “Economic policy credibility has deteriorated in recent months and initial policy actions following elections in June have heightened uncertainty,” Fitch said in a statement. “This environment will make it challenging to engineer a soft landing for the economy.” Turkish assets came under pressure this week after President Recep Tayyip Erdogan appointed his son-in-law Berat Albayrak as the country’s economy chief. Erdogan replaced market-friendly names, stoking unease among investors and eroding confidence in the country’s ability to avoid a potential hard landing in the economy. The nation’s current-account deficit will widen to 6.1% in 2018 driven by higher fuel prices and increased household consumption, according to Fitch. A depreciating lira should allow the deficit to narrow to 4.1% by 2019, it said.
