Şimşek Welcomes Fitch Outlook Upgrade, Signals Crackdown on Hot Money Inflows

Treasury and Finance Minister Mehmet Şimşek has welcomed Fitch Ratings’ decision to revise Türkiye’s credit rating outlook from “stable” to “positive,” describing it as one of three recent developments that will strengthen macro-financial stability and reduce economic vulnerabilities.

In a statement shared on social media, Şimşek said the outlook upgrade signals the possibility of a future credit rating increase if current policies are sustained.

Three positive developments

According to Şimşek, the first key development was Fitch’s decision to shift Türkiye’s outlook to positive, reflecting growing confidence in the economic program.

Fitch Turns Positive on Türkiye, Moody’s Holds Steady as Inflation Eases and Reserves Rise

The second was the full termination of regulations related to the FX- and gold-linked protected deposit scheme (KKM). With all remaining maturities of KKM accounts now expired, the scheme — long viewed as a significant contingent liability — has been completely phased out.

The third measure involves tighter controls on short-term foreign funding. Şimşek noted that required reserve ratios were raised to curb speculative capital inflows and reinforce financial stability.

“Through our program, we will continue to reduce the economy’s fragilities and strengthen macro-financial stability,” Şimşek said.

CBRT tightens required reserve rules

Separately, the Central Bank of the Republic of Türkiye (CBRT) announced changes to required reserve ratios as part of its macroprudential framework, aiming to improve monetary transmission and limit volatile capital flows.

Under the new rules, required reserve ratios on Turkish lira liabilities obtained from abroad with maturities of up to one year were increased by 2 percentage points. Reserve requirements for TL-denominated foreign repo transactions and external borrowing were set at:

• 20% for maturities up to one month

• 16% for maturities up to three months

• 14% for maturities up to one year

The required reserve ratio for foreign banks’ deposits and participation funds with maturities of up to one year, as well as liabilities to foreign headquarters, was also raised to 14%.

The amendments were published in the Official Gazette on January 24, 2026, and entered into force immediately.

In addition, required reserve ratios for exchange rate- or price-protected accounts were set at 40% for maturities of up to six months, and 22% for maturities of one year or longer.

Weekly Capital Flows: CBRT reserves surge as foreign investors pile into Turkish bonds

Analysis: clear message to short-term capital

Together, the statements from Şimşek and the CBRT underline a clear policy stance: opportunistic foreign exchange inflows will not be tolerated.

The structure of the reserve requirement increases is designed to limit short-term currency swaps and prevent “domestic carry trade” strategies, whereby corporates or banks with strong credit ratings borrow cheaply abroad and convert the proceeds into high-yield TL deposits.

Policymakers appear intent on prioritizing durable disinflation, reserve accumulation, and financial stability over short-term capital inflows, even at the cost of reduced liquidity or slower credit growth.