Turkey has secured a fresh source of foreign exchange from Qatar as authorities scramble to find foreign reserves to prop up the country’s stumbling economy.
Turkish and Qatari central banks are tripling the limit of their existing swap deal to $15 billion to facilitate “bilateral trade in respective local currencies and to support the financial stability of the two countries,” according to a statement Wednesday. The lira briefly swung to a gain after the announcement, before erasing its advance to edge lower against the dollar.
Qatar has continued to support Turkish President Recep Tayyip Erdogan, offering a credit line to at the height of Turkey’s currency crisis in 2018.
The new deal could effectively raise Turkey’s battered reserves by up to $10 billion, adding to a stockpile whose size was called into question by investors because the central bank boosted them by including dollars borrowed from commercial lenders in its foreign holdings.
Authorities have been leaning on state lenders to flood the market with dollars, and finding a source of foreign exchange has become increasingly urgent with gross central bank reserves down $17 billion since the beginning of the year to $89.2 billion.
Analysts had earlier predicted that Turkey could run out of reserves by as early as July as the central bank has been spending around $440 million a day to prop up the struggling lira.
Ankara and Doha have grown increasingly close in recent years since Saudi Arabia, the UAE, Bahrain and Egypt cut ties with Qatar more than two years ago over accusations that Qatar supports extremist groups across the region.
Erdogan visited Qatar in November last year in his first official rip to an Arab country since Ankara’s forces began to intervene in northeast Syria last month against Kurdish-led forces.
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