Moody's cut Turkey's sovereign debt rating by one notch to the speculative or "junk" level of "Ba1" Friday, saying the country's finances have weakened amid increased political turmoil.

"Turkey continues to operate in a fragile financial and geopolitical environment," Moody's said. "Its external vulnerability has risen, both over the past two years and more recently as a result of unpredictable political developments and volatile investor perception."