Turkish Lira Tumbles As Erdogan Threatens Moody's With An "Operation"

While S&P faced being 'black-called' after daring to downgrade US sovereign rating in 2011, Moody's decision to (rightfully) downgrade Turkey to 'junk' (and warn on its banking system) has prompted a direct threat from the country's strongman leader.

In September 2016, rating agency Moody's cut Turkey's sovereign credit rating to Ba1 or "junk" from Baa3, citing worries about the rule of law after an attempted coup and risks from a slowing economy, in a move that could deter billions of dollars of investment. "The drivers of the downgrade are ... the increase in the risks related to the country's sizeable external funding requirements (and) the weakening in previously supportive credit fundamentals, particularly growth and institutional strength," Moody's said in an e-mailed statement.  "The government's response to the unsuccessful coup attempt raises further concerns regarding the predictability and effectiveness of government policy and the rule of law."

The cut is Turkey’s second since a failed (or as some claim orchestrated) coup in July threatened to destabilize national security.

And since then the capital flight has been significant and the currency has collapsed, not helped by Moody's decision in to put Turkey's Ba2 rating on review for downgrade...

Which has pissed Erdogan off and today he lashed out in the most aggressive manner yet.

“God willing, we will conduct an operation against Moody’s after June 24. Moody’s is making unnecessary statements despite the fact that we are not a member of it. What a shame,” state-run Anadolu Agency cites President Recep Tayyip Erdogan as saying.

"Moody’s is taking steps to defame Turkey, to put it in a difficult situation...It will not succeed”

The response in the market was quick - selling of the Lira - erasing much of the spike from the big rate hike...

We would strongly suggest any local Moody's reps leave the country - Erdogan seems to have no problem arresting and detaining anyone for anything.

Disclosure: Copyright ©2009-2018 ZeroHedge.com/ABC Media, LTD; All Rights Reserved. Zero Hedge is intended for Mature Audiences. Familiarize yourself with our legal and use policies every ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Or Sign in with
Gary Anderson 6 years ago Contributor's comment

Wow, Turkey bought ISIS oil back in the day, probably with the blessing of the United States. Turkey probably feels it is owed something for doing the west's dirty work. And it feels betrayed. There is a logic to it.

The Good Doctor 6 years ago Member's comment

Aren't they still buying ISIS #oil?

Gary Anderson 6 years ago Contributor's comment

I can't confirm that, can you?