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Turkey Expands Crisis-Era Swap Deal With Qatar to $5 Billion

Qatar Extends Support to Turkey’s Economy With Bigger Swap Deal

(Bloomberg) --

Turkish and Qatari central banks are boosting the size of a currency-swap deal that dates back to last year’s lira crisis, extending the gas-rich Gulf nation’s support for its ally by adding to its foreign-exchange reserves.

Clinched during President Recep Tayyip Erdogan’s visit to Doha, the agreement will raise the limit on the existing arrangement to $5 billion from $3 billion. The goal is to boost “bilateral trade in respective local currencies and to support financial stability of the two countries,” Turkey’s central bank said in a statement on Tuesday.

Drawn closer by a succession of crises in both countries, the latest commitment cements an alliance that began to deepen after a failed 2016 coup against Erdogan, when he received backing from Qatar’s rulers. Turkey returned the favor a year later by siding with Qatar after it came under an economic boycott from a group of countries led by Saudi Arabia, Turkey’s rival in the Middle East.

The strong ties culminated last year when Qatar pledged as much as $15 billion of investment and offered a credit line to backstop Turkey’s financial system at the height of its currency crisis. Meanwhile, Turkey has stationed troops and steadily built up a base in Qatar since 2017.

“Qatar stood by us during the July 15 coup attempt and other attacks against our country,” Erdogan said. “Turkey also stood by Qatar during its difficult times.”

$2 Billion Boost

The higher limit on the swap deal could effectively raise Turkey’s reserves by up to $2 billion, adding to a stockpile whose size was called into question by investors earlier this year because the central bank boosted them by including borrowed dollars in its foreign holdings

Turkey has been trying to sign similar agreements with other partners and has a currency-swap deal with China, signed seven years ago and renewed every three years. China’s central bank transferred $1 billion worth of funds to Turkey in June.

Erdogan was cited as saying that Turkey and Qatar signed seven agreements and a joint declaration during his visit, which included a stop at Turkey’s military base. Qatar has become a major market for Turkish firms no longer able to work in countries like Libya. The total amount of contracting work won by Turkish companies exceeds $18 billion, according to Erdogan.

As efforts to resolve the standoff between Qatar and the Saudi-led bloc are gathering momentum, Turkey’s president sounded a note of optimism about the prospects of overcoming the rift.

“Those who have imposed the boycott have failed,” he said. “I believe this boycott should end and a new era of peace, stability and cooperation should start in the Gulf region.”

To contact the reporter on this story: Cagan Koc in Istanbul at ckoc2@bloomberg.net

To contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, Paul Abelsky

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