Fitch Ratings affirmed Türkiye’s credit rating at “BB-” with a stable outlook on July 17, 2026. The rating agency stated it is monitoring Türkiye’s international reserves, noting that a durable improvement is key to a potential credit rating upgrade.

The affirmation followed an unscheduled assessment Fitch Ratings conducted in April 2026 during the U.S.-Israel-Iran war. During that conflict, Türkiye’s international reserves declined but have since recovered somewhat. Erich Arispe Morales, a senior director at Fitch Ratings, said the current level remains insufficient relative to earlier benchmarks. "We have reserves that have recovered somewhat but remain below the February levels or pre-war levels," Morales said.

Inflationary pressures in the country have eased somewhat, though the inflation rate remains above 30 percent. Morales noted that regional instability continues to pose challenges for economic stability. "We have seen that inflationary pressures have also eased somewhat, but of course we are currently in a situation in which still there’s a high degree of political uncertainty which can have implications, of course, not only for Türkiye, but for other emerging market in terms of risks of higher energy prices and what that means for inflation, but also for external balances," he said.

Despite increased uncertainty and a decline in reserves, policy settings have maintained gains in inflation dynamics and inflation expectations. However, a positive factor is that, in spite of the increased uncertainty and the decline of reserves, policy settings have been as such to maintain, or at least avoid, a significant reversal in the gains that we’ve seen in terms of inflation dynamics, especially those related to inflation expectations," Morales said. Turkish central bank authorities and economic policymakers have communicated a commitment to bringing sustainable inflation down."

Dollarization in Türkiye remains relatively stable at 38 percent. The banking sector is healthy, and the country retains the capacity to access external financing. Real interest rates have reached a level that contributes to the attractiveness of Turkish lira-denominated assets. "I think that one thing is to think about the capacity from the policies over access to financing, the health of the banking sector that gives Türkiye the capacity to withstand external shocks," he said.

Fitch Ratings emphasized that external financing requirements are relatively high for the nation. "If combined with external financing requirements, which are relatively high for Türkiye, I think what is important there is the word ‘durable,’" he said. He added that maintaining tight policy settings is essential to reduce macro imbalance of payment risk. "And the other [factor] is the maintenance of these policy settings that are sufficiently tight to support a marked decline in inflation over time, as well as reducing the macro imbalance of payment risk, I think this is important to build this confidence in an environment that can see external shocks and political pressures or uncertainty," he said.

The Turkish Central Bank considered high geopolitical risks and pressure on energy prices when determining the extent of monetary policy easing. Fitch Ratings expects some dovish monetary policy later in 2026, based on the assumption that geopolitical risks will ease and energy prices will decline. The average price of Brent crude oil is projected to be $87 per barrel in 2026. "We have an average of $87 per barrel of Brent this year and that’s consistent of some easing later in the year, which takes us to end-2026 policy rate of 35 percent, that’s 200 basis points below what the current level," he said.

Türkiye faces a high degree of political uncertainty due to regional geopolitical risks. The stable outlook reflects resilience despite these external shocks and the ongoing need for durable improvements in international reserves. The assessment shows the interconnected nature of energy prices, inflation, and external balances for emerging markets in the region.