Reuters: US Dollar Report: RPT-Moody's says Turkey's credit risk to rise if protests go on

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RPT-Moody's says Turkey's credit risk to rise if protests go on Jun 10th 2013, 09:38 Mon Jun 10, 2013 5:38am EDT ISTANBUL, June 10 (Reuters) - Anti-government protests across Turkey will become increasingly credit-negative the longer they last and have heightened risks to the country's balance of payments, ratings agency Moody's said on Monday. The agency added that the "current level of political and balance of payment risks" were reflected in its rating and outlook. Moody's raised Turkey to investment grade with a stable outlook last month, a move that enabled more funds to invest in the economy after peer Fitch gave the country its first investment grade rating last November. Protesters have occupied Istanbul's central Taksim Square for more than a week and police have fired tear gas and water cannon against demonstrators in clashes across the country. On Sunday, Prime Minister Tayyip Erdogan warned protesters who have demanded his resignation that his patience has its limits and compared the unrest with an army attempt six years ago to curb his power. He also rounded on what he a called a "high interest rate" lobby of speculators for causing volatility in the country's capital markets and vowed to "choke" those who were growing rich off "the sweat of the people". His comments drove Turkish market lower on Monday. "These political disturbances...heighten the government of Turkey's susceptibility to balance of payments risks through reduced tourist arrivals and portfolio investment inflows," Moody's said in a note. It said continued protests could also deter foreign direct investment inflows. "We currently consider Turkey's susceptibility to economic event risk is high, precisely because of the vulnerabilities created by its reliance on highly liquid sources of current account financing," Moody's said. It said Turkey's protesters had focused on Erdogan's perceived autocratic tendencies and that the protests also reflected the presence of a weak and ineffective political opposition that has been unable to represent the concerns of citizens who do not support the ruling AK Party. Link this Share this Digg this Email Reprints

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