Moody’s Investor Service, is out with a credit review report on Turkey, citing that the erosion of Turkey’s foreign currency reserves is credit negative.

• Intervention to support the lira is contrary to the central bank’s longstanding policy to allow the exchange rate to float freely and poses renewed questions about the transparency and independence.

• The renewed slip in Turkey’s financial markets and uncertain policy reaction to recession raises a risk of further capital flight.

• The results of local polls will likely determine the future path of macroeconomic policy.

• This weekend’s municipal elections results will likely determine the future path of macroeconomic policy and therefore whether the latest market shock persists or dissipates.