Turkey says Moody's rating downgrade is 'political'

Turkey has bemoaned Moody's decision to downgrade its sovereign debt rating to "junk" status, with Turkish Deputy Prime Minister Numan Kurtulmuş claiming the decision was political.

The downgrade has raised prospects of an outflow of foreign funds and a tightening of external borrowing.

Kurtulmuş dismissed these concerns, saying the economy was on track and that Turkey had not seen a large outflow of funds before the downgrade on Friday.

Speaking to journalists in the capital Ankara after a cabinet meeting, he said the decision was an attempt to "undermine" Turkey's economic credibility.

Good economic management following an unsuccessful coup attempt on July 15 offset risks and macroeconomic indicators afterwards had been stable, he explained.

Turkey relies on investment to fund its current account deficit and service its foreign debt.

The markets reacted sharply when trade opened on Monday. Turkish shares tumbled and the lira fell sharply.

Sovereign ratings are supposed to show how risky it is to invest in a particular country by evaluating its capacity to honour its debt payments on time and in full.

However, several rating agencies came under sharp criticism for exacerbating the global financial crisis of 2007-2008 due to the inaccuracy of their ratings.