Istanbul/Dubai: – Turkey has signed a Currency Swap Deal with the United Arab Emirates (UAE) to stop the slide in the local currency Lira and the leak in the foreign reserves. The agreement is said to be for three years. This is the fourth Currency Swap Deal signed by Turkey to stop the leak in the foreign exchange reserves. The media informed that the deal between the two countries was signed on Wednesday.
Moreover, strong tensions reigned between Turkey and UAE in the last decade. But the tensions started defusing following UAE Crown Prince Mohammed Bin Zayed’s visit to Turkey in November last year. Crown Prince Mohammed Bin Zayed signed nearly ten agreements with Turkey during his visit. UAE also indicated a direct investment of $10 billion in Turkey. Against this background, the new agreement becomes significant. The new agreement will make it possible for UAE to invest directly in USD in Turkey.
This agreement with UAE became the fourth Currency Swap Deal signed by Turkey. Earlier, Turkey signed Currency Swap Deals with Qatar, China, and South Korea. The deals are $15 billion with Qatar, $6 billion with China and $2 billion with South Korea.
In the last year, the Turkish currency Lira has slid by about 50% against the USD. In December itself, the Turkish central bank had to intervene five times to stop the slide of the Lira. It is being said that during these interventions, the Turkish central bank must have sold USD to the tune of 6 to 10 billion. There has been a massive drop in the foreign exchange reserves of Turkey following this.
It is being said that Turkey is trying to temporarily secure its currency through the medium of these Currency Swap Deals. But analysts claim that these Currency Swap Deals will not be beneficial for the long term stability of the Turkish economy.
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