Turkey’s lira weakened the most in three weeks, while bonds and stocks fell, as Moody’s Investors Services lowered the nation’s credit-rating outlook to negative 11 months after upgrading the debt to investment grade.
Moody’s cut the outlook from stable, citing “increased pressure on the country’s external-financing position driven by heightened political uncertainty and lower global liquidity,” which have hurt investor confidence. Turkey was raised to Baa3 by Moody’s in May 2013, the lowest investment grade and on par with India and Ireland.
The lira lost 0.5 percent to 2.1171 per dollar as of 10:49 a.m. in Istanbul, the most on a closing basis since March 19. That’s the biggest retreat among 24 developing-nation peers, after Indonesia’s rupiah and trims the currency’s gain to 3.5 percent since Prime Minister Recep Tayyip Erdogan’s victory at March 30 local elections. Yields on two-year government notes rose nine basis points to 9.92 percent, while the Borsa Istanbul 100 Index of equities dropped 1 percent.