International credit rating agency Moody’s upgraded Türkiye’s sovereign credit rating from B1 to Ba3 on Friday, while shifting the country’s outlook from “positive” to “stable.”

The decision reflects significant strides in Türkiye’s economic policy and efforts to curb inflation, according to the agency’s statement.

Moody’s praised the Turkish government’s “strengthening track record of effective policymaking,” spotlighting the Central Bank’s disciplined monetary policy. This approach has eased inflationary pressures, reduced economic imbalances, and begun restoring confidence in the Turkish lira among local depositors and foreign investors. “The upgrade reflects the central bank’s adherence to monetary policy that durably eases inflationary pressures and gradually restores confidence,” Moody’s stated.

While acknowledging the reduced likelihood of a policy reversal, Moody’s cautioned that risks remain over the coming years. The agency also highlighted Türkiye’s structural reforms, particularly efforts to reduce reliance on energy imports and boost export competitiveness, as key to enhancing resilience against global economic shocks.

In tandem with the sovereign rating upgrade, Moody’s raised Türkiye’s local-currency ceiling to Baa3 and its foreign-currency ceiling to Ba2, signaling improved policy credibility. However, the agency noted persistent vulnerabilities, including limited foreign exchange reserves and the potential for sudden policy shifts.

Analysts see the upgrade as a positive signal to global markets, likely to boost foreign investment and lower borrowing costs for Türkiye. The move underscores growing confidence in the country’s economic trajectory under its current policy framework. (ILKHA)