In a statement, the Turkish Central Bank said the two countries had extended a swap agreement reached for the first time during Turkey`s 2018 currency crisis and reaffirmed the close ties between President Recep Tayyip Erdogan and the wealthy Gulf nation. Qatar has offered its support to the Turkish Central Bank and has extended a monetary sweapage agreement to $15 billion as Ankara tries to mitigate economic shocks due to the coronavirus pandemic. “The main objectives of the agreement are to facilitate bilateral trade in local currencies and to support the financial stability of both countries,” the Turkish Central Bank said. Turkish economy, covid-19, Coronavirus, imf, exchange, swap-deal, Turkey-Qatar relations Selva Demiralp, professor at Derko at Koc University and director of the Economic Research Forum of the University of Koc, said that the swap line could compensate for the increase in domestic monetary supply of foreign currency and help stem the depreciation of the lira, but found that the Turkish central bank will have difficulties in stimulating the economy in the middle of the global recession. The border of the swap agreement between the central banks of Turkey and Qatar has been changed to the equivalent of $15 billion of the Turkish lira and the Qatari riyal. Another leading economist, Mustafa Sonmez, said Turkey had tried to negotiate swap agreements with several G20 countries, including the United States, the United Kingdom and Japan. As part of the updated deal in which Ankara trades the Turkish lira for Qatari riyals, the ceiling on currency swups between the central banks of the two countries has tripled from $5 billion to $15 billion. Ulgen said Qatar`s swap line would help contain inflationary pressures on the Turkish lira in the short to medium term, but that the Ankara authorities would continue to look for ways to reverse the economic slowdown in the coming months. ISTANBUL: Turkey has tripled its monetary sweavision agreement with Qatar to $15 billion, as announced by the Central Bank on Wednesday.
Ankara had urgently sought access to funds from Doha and other countries to avoid a possible currency spiral, and analysts say tens of billions of dollars may be needed. A senior Turkish official told the Reuters news agency that talks were continuing. The Turkish Central Bank said the deal with its Qatari counterpart – which raised the current exchange limit of $5 billion – would support financial stability and trade. The lira hit an all-time low earlier this month, when investors were unhappy with a decline in the Central Bank`s net foreign exchange reserves and the country`s relatively high external debt liabilities, which accelerated Ankara`s financing overseas. Reuters reported last week that officials from the Turkish Finance Ministry and the Central Bank had called on their colleagues in Qatar and China to expand existing swap lines and in the UK and Japan to eventually set them up. Turkey has a swap mechanism of about $1.7 billion with Beijing. “Discussions on swaps are continuing and, most importantly, some are in a very positive situation. We also expect positive results from them soon,” the senior Turkish official said before the Central Bank`s announcement. The official, who requested anonymity, described some conversations as continuous and others as frost.
Over the past eight days of trading, the lira has focused on expectations of new financing that would limit previous sales in the lira, which some analysts have said could escalate as in 2018, when the Turkish currency crisis rocked emerging markets.