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Tuesday, March 21, 2023

Turkish central bank receives $5 billion from Saudi Arabia

Saudi Arabia's aid is likely to boost Turkey's declining lira, which has depreciated by almost 30% over past year.

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Saudi Arabia has signed an agreement with Turkey to deposit $5 billion in the country’s central bank through the Saudi Fund for Development (SFD), the fund said on Monday.

Saudi Minister of Finance Mohammed Bin Abdullah Al-Jadaan announced his country’s intention to make the deposit in December.

While Turkey’s net foreign exchange reserves rebounded from just over $6 billion last summer, when it was at its lowest in at least 20 years, they have lost some $8.5 billion since a massive earthquake hit the country’s southern region early in February that killed more than 45,000 people and left millions homeless.

The Turkish central bank’s net international reserves fell some $1.4 billion to $20.2 billion in the week to Feb. 24, data from the bank showed on Thursday.

The Saudi deposit follows joint efforts by Ankara and Riyadh to mend ties that were ruptured after the murder of Saudi journalist Jamal Khashoggi in 2018 at the kingdom’s consulate in Istanbul.

Turkey’s forex reserves dropped sharply in recent years due to market interventions and in the wake of a currency crisis in December 2021. The lira lost some 30% of its value against the dollar last year and 44% in 2021.

Read More: Turkey-Syria earthquakes

The deposit was signed between SFD Chairman Ahmed Aqeel Al-Khateeb, who is also Saudi Arabia’s tourism minister, and Turkish Central Bank Governor Sahap Kavcioglu, the SFD statement said.

Turkey’s state-run Anadolu Agency praised the deposit, saying it reflected the kingdom’s “strong support for the Turkish people and its confidence in the future of the Turkish economy.”

“This agreement supports Turkey’s economic and social growth and sustainable development,” Anadolu said. “Thanks to this deposit, it is aimed to contribute to the solution of economic problems in various sectors.”

Turkey has been struggling with high inflation and a weakening lira even before the recent devastating earthquakes and many of its strong aftershocks.

Reuters story with additional input from Global Village Space News Desk.