An expanded swap agreement between Qatar and Turkey is expected to boost the latter’s currency reserves by as much $2 billion.
According to the Turkish central bank, the deal has increased the limit of the currency exchange, in which Turkey will swap lira for Qatari riyal, from $3 billion to $5 billion.
The swap is tantamount to a loan. A statement from Turkey’s central bank said: “The core objectives of the agreement are to facilitate bilateral trade in respective local currencies and to support the financial stability of the two countries.”
The arrangement follows a recent visit to Qatar by Turkey’s president Erdogan and comes at a time when Turkey’s currency reserves have come under scrutiny from investors following last year’s currency crisis.
Turkey and Qatar have also become political as well as economic allies in recent years. Following the Saudi-led economic blockade against Qatar in 2017, President Erdogan stood with Qatar. And during his recent visit he also opened a new Turkish military base in Qatar which he described as a symbol of “brotherhood, friendship, solidarity and sincerity” between the two countries.
In return for the political support and following its currency crisis, Qatar promised to invest $15 billion in Turkey. No sizeable public investments have been seen so far and the newly extended currency swap is tantamount to a borrowing agreement as opposed to an investment.
The promised $15 billion investment was reviewed at the latest meeting, according to the statement from Turkey’s central bank, and a number of memorandums of understanding to encourage greater cooperation around financial services were also signed.
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