It also said that the government's reaction to the July coup attempt had set back expected reforms and the rule of law.
"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."
Moody's said a fall in tourism receipts, which represent 4.4 percent of the economy, due to Russia's sanctions last year and a rise in attacks inside the country had weakened its balance of payments.
At the same time, it noted, external debt had surged in the government, corporate and banking sector, with some $156 billion in payments due this year.
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"This large external funding need exposes the country to sudden shifts in investor confidence, which has been weak and volatile over the past 18 months," Moody's said.
While the country appears to have weathered financially the recent failed coup attempt, Moody's said overall the chance of an eventual balance of payments crisis had risen due to "the combination of elevated external financing needs, the rise of domestic political risk, and the persistence of geopolitical threats."
In addition, it added, "the government's response to the unsuccessful coup attempt raises further concerns regarding the predictability and effectiveness of government policy and the rule of law going forward."
