Turkey is likely to bolster its foreign currency reserves by as much as $2bn after expanding a swap agreement between the central banks of Turkey and Qatar. According to the official statement of Turkey’s central bank, Ankara and Doha have agreed to raise the ceiling of an existing swap agreement in the latest sign of a friendship between the duo. Both states have shown unflinching commitment in recent times—particularly at the moment when Qatar had to face blockade by the Arab states and Turkey’s recent engagement with the Kurd militants.
Turkey and Qatar boost currency swap arrangement to $5bn https://t.co/dIaNOtw9NZ
— Financial Times (@FT) November 26, 2019
According to the details, the limit of the deal, which sees Ankara exchange lira for Qatari riyal, will be raised from the equivalent of $3bn to $5bn, the bank said following a visit to Doha by President Recep Tayyip Erdogan. “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,” it said.
The boost is expected to be reflected in the central bank’s official reserve figures, which have been the subject of close scrutiny by investors and analysts since last year’s currency crisis. The bank’s use of other, short-term swap agreements has raised questions about the true size of the war chest available to Turkey to defend the lira and underwrite its large external debt burden. The central bank has previously conceded that swaps have an impact on reserve figures.
Ankara-Doha Close Ties
Qatar, the world’s richest state in per capita terms thanks to its large gas reserves, promised to invest $15bn in Turkey when it was struck by a dramatic currency devaluation in the summer of 2018. The move provided a show of symbolic support for Ankara in the midst of the crisis.
Qatar gave a private jet to Turkey last year — said to be the largest and most expensive of its kind. Speaking last year, Mr. Erdogan said that the plane was given as a gift to the Turkish nation by Qatar’s ruler Sheikh Tamim bin Hamad al-Thani after he learned that Ankara had expressed an interest in buying it.
It is important to note that recently Qatar’s Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani clarified that Turkey’s military incursion was not expansionist but because it faced an “imminent threat” from Kurdish groups on its Syrian border. As a matter of fact, President Recep Tayyip Erdogan has also clarified that the offensive aims to remove the Kurdish-led forces from the border area and create a “safe zone” to which millions of Syrian refugees can be returned.
— علی مصطفی | Ali Mustafa (@Ali_Mustafa) November 25, 2019
He was speaking at Global Security Forum in Doha when he comprehensively addressed the matter and explained it to the world what the situation is like now. “At the beginning [Turkey] said ‘don’t support these groups’,” Abdulrahman said, referring to Kurdish elements such as the People’s Protection Units (YPG) that helped the US-led coalition combat the militant Islamic State (IS) group.
Deep Economic Dies Between Turkey and Qatar
It is important to point out that Turkey and Qatar enjoy friendly and brotherly relations despite the latter’s blockade by Arab states since 2017. Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt accuse Qatar of supporting terrorism. Doha denies the charge and says the boycott aims to infringe on its sovereignty.
Trade between Qatar and Turkey is expected to have hit $2 billion in 2018, a Turkish official said, up 54 percent from the previous last year and underscoring Ankara’s solidified role as a top ally to Qatar amid a political rift in the Gulf region.
Qatar-Turkey trade volume for the first 10 months of 2018, the latest data available, indicates $1.7 billion of total trade, higher than the $1.3 billion in all of 2017, a Turkish trade official told international media. That trade includes goods such as Turkish food and building materials to Qatar and Qatari liquefied natural gas and aluminum to Turkey.