Turkey and the United Arab Emirates (UAE) have agreed on a deal to swap almost $5 billion in local currencies, in an effort to boost Ankara's foreign reserves and provide its financial support during an ongoing economic crisis.
The signed deal was announced today in a statement by Turkey's Central Bank, which said that "The nominal size of this swap agreement is mutually AED [Emirate dirham] 18 billion and TRY [Turkish lira] 64 billion". That makes the total amount of the currency swap around $4.71 billion and is set to last for three years, with an extension possible after that.
According to Turkish Central Bank Governor, Sahap Kavcioglu, the agreement "demonstrates the two central banks' commitment to deepen bilateral trade in local currencies in order to advance economic and financial relations between our countries".
The currency swap deal – initially predicted in reports that emerged in November – is the latest such deal that Ankara has inked, joining its existing swap deals with China, Qatar, and South Korea which are worth around $23 billion overall.
It comes amid Turkey's ongoing economic crisis that has seen the value of the Turkish lira plummet sharply over the past year due to President Recep Tayyip Erdogan's opposition to high interest rates, the loss of foreign investment into the country, and the lack of sufficient foreign reserves.
The recent restoration of Ankara's ties with Abu Dhabi after a decade of regional rivalry is seen as a boost to the Turkish economy and a step to regain the trust of potential foreign investors, especially after the UAE agreed in November to invest $10 billion into Turkey.
This currency swap deal is predicted to be a significant boost to Turkey's economy and foreign reserves, as its Central Bank's net international reserves fell below $8 billion earlier this month, making it the lowest since 2002.