ISTANBUL ( Reuters ) – The Turkish Central Bank said on Wednesday that it had tripled the size of a currency swap agreement with Qatar to the equivalent of $ 15 billion from five billion, in an agreement providing much-needed foreign liquidity.
The Turkish currency touched an unprecedented low level earlier this month as investors feared the decline in the central bank’s net foreign exchange reserves and Turkey’s relatively high external debt obligations, which prompted officials to seek financing from abroad.
Reuters reported last week that Turkish treasury and central bank officials approached their counterparts in Qatar and China about increasing the size of existing swap lines, and also spoke with Britain and Japan about the possibility of creating similar facilities.
The Turkish Central Bank said that the amendment of the swap agreement concluded in 2018 with the Qatar Central Bank aims to ” facilitate bilateral trade ” in the local currency, along with ” supporting financial stability in both countries.””.
According to the facility, the exchanges take place in Turkish lira and Qatari riyals.
Analysts say that if Turkey fails to secure tens of billions of dollars in financing, it will risk the collapse of its currency as it did in 2018 when the lira briefly lost half its value in a crisis that shocked emerging markets..
The lira has risen over the past eight trading sessions, partly due to expectations that Ankara will sign foreign agreements to allow more liquidity..