Fitch Ratings downgraded Turkey's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'BB-' from 'BB' with a Negative Outlook on Friday.
The rating was slashed before the update scheduled for November 1 as President Recep Tayyip Erdogan fired Murat Cetinkaya, head of the central bank, the agency said, highlighting that the dismissal impairs confidence and may hamper capital inflows.
Fitch also highlighted excessive inflation, the forced 'do-over' of the election of the Mayor of Istanbul and Ankara’s falling-out with the US over the purchase of Russian S-400 anti-aircraft systems as contributing factors.
On 12 July Turkey's Defence Ministry said Ankara had received the first shipment of the Russian-made S-400 air defense missile system components.
The equipment arrived at Murted Air Base, with a second batch reportedly expected shortly.
The move triggered an immediate US response, with the leadership of the Senate Armed Services and Foreign Relations committees saying in a joint press release Friday that US President Donald Trump should impose sanctions on Turkey, its NATO ally.
The group of senators warned that by accepting delivery of the S-400 systems, Turkey’s President Recep Tayyip Erdogan had opted for a "perilous partnership" with Russian President Vladimir Putin at the expense of Turkey's security, economic prosperity and the integrity of the NATO alliance.
Turkey’s Defence Minister Hulusi Akar had a phone conversation with acting US defence secretary Mark Esper to emphasise that the purchase was of vital necessity for Ankara, which remains under a serious air and missile threat.
Turkey’s Ministry of National Defence said Akar told his US counterpart that Turkey was still assessing the bid to acquire US patriot air defence systems and the current purchase doesn’t signify a change of its strategic orientation.
In late June, at the G20 summit in Osaka, Japan, US President Donald Trump had told Turkish President Recep Tayyip Erdogan there would be no sanctions targeting Turkey after it received the S-400 defence systems.
At the summit, Trump blamed the standoff on then-President Barack Obama's refusal to sell Patriot missiles to Turkey, and said Turkey had not been treated fairly. When asked about possible sanctions against Turkey, Trump said “we are looking at it, but it’s a two-way street”.
Turkey’s cooperation with Russia on S-400 deliveries has been repeatedly criticised by the US, as it urged Turkey to buy US Patriot missiles, citing security concerns over the S-400s incompatibility with NATO's air defence systems. The United States claimed the S-400s may compromise the F-35 stealth jet project.
Ankara opted in 2017 to purchase the Russian S-400s, while emphasizing the system would not be integrated into NATO and would not pose a threat to the alliance.
The S-400 is Russia's most advanced mobile air defence system, capable of detecting, tracking and destroying all categories of manned aircraft (including stealth), as well as drones, cruise and ballistic missiles.