Standard & Poor's upgraded Turkey's long-term local currency sovereign rating to “BBB-” from “BB+”, confirming the country's foreign currency rating at “BB”. The agency also communicated that the outlook, both local and national, is positive. The short-term rating was revised from "B" to "A3", while the long-term debt rating was raised from "BB+" to "BBB". During the night, however, Standard & Poor's had cut Italy's rating, going down from “A+” to “A” with a negative outlook.
Meanwhile, Société Générale has forecast that Turkey's central bank will keep its repo rate (the main refinancing rate) unchanged during today's session. The Turkish central bank cut rates by 50 points, bringing them to 5,25% in August and according to Soc Gen analysts there is no reason to anticipate a further reduction. Indeed, the country's economy is enjoying good health. Second quarter GDP data showed the economy grew 8,8% yoy, down from 11,6% in the first quarter but above the consensus figure of 6,3%. July industrial production was up 6,9% yoy versus 4% expected.
