International rating agency Fitch has downgraded Turkey's long-term foreign currency issuer default rating (IDR) to "B+" from "BB-", the rating outlook is negative, RIA Novosti reported citing the agency.

The rating reflects Turkey's weak reliability and predictability of policy, high inflation, low external liquidity compared to high external funding requirements and dollarization, and geopolitical risks.3

Fitch does not expect the authorities' inflation-targeting measures, including foreign currency, safeguarded deposits and directed lending, to persistently mitigate risks to macroeconomic and financial stability.

The agency forecasts that inflation will reach 38% by year-end and average 41% in 2022 and 28% in 2023, the second-highest among all sovereign nations rated by Fitch.

The 18% collapse of the Turkish lira on 23 November was the highest in 20 years. The exchange rate reached a record 18.4 lira on 20 December, compared with 7.4 lira as recently as January last year.

However, following Turkish President Erdogan's statements on measures to counter exchange rate volatility, the lira jumped sharply in late December. On Monday, the lira was down to 13.5161 lira per dollar from its previous closing level of 13.5312 lira.