ISTANBUL: The Turkish lira weakened to 2.99 against the dollar on Monday after ratings agency Moody's cut Turkey's sovereign credit rating to "junk," citing worries about the rule of law after an attempted coup and risks from a slowing economy.
At 0519 GMT, the lira stood at 2.9925 against the U.S. currency, weakening from 2.9550 on Friday evening before Moody's announced its decision late that night.
The agency cut the government's long-term issuer and senior unsecured bond ratings debt to non-investment grade Ba1 from Baa3. It kept its outlook on the rating "stable," saying Turkey's flexible $720 billion economy and strong fiscal track record offset the balance-of-payments pressures it faces.
Turkey depends on investment flows to fund its current account deficit - one of the biggest in the G20 - and service its foreign debt. Ratings downgrades could force it to pay more to borrow money in international markets.
Prime Minister Binali Yildirim said the action, which came late on Friday, showed Moody's was not being impartial nor basing its rating solely on economic factors.
The downgrade followed a two-notch cut by Standard and Poor's right after the failed putsch on July 15. Of the three major agencies, only Fitch has Turkey on investment grade and it is due to review that rating at the start of 2017.
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