UAE agrees deal to boost Turkey’s central bank reserves

UAE agrees deal to boost Turkey’s central bank reserves

Turkey and the United Arab Emirates signed a $5bn deal to boost Ankara’s foreign currency reserves in the latest sign of warming ties between the two former arch rivals.

The two nations’ central banks announced a swap agreement that they said would be worth 18bn dirhams ($4.9bn) and 64bn lira.

Khaled Mohamed Balama, governor of the UAE central bank, said that the agreement “reflects each nation’s desire to enhance bilateral co-operation in financial matters, particularly in the fields of trade and investments between the two countries”.

His Turkish counterpart, Sahap Kavcioglu, said that it demonstrated their commitment “to deepen bilateral trade in local currencies in order to advance economic and financial relations between our countries”.

Turkey, which has a large foreign debt burden, has suffered a renewed dip in its reserves of foreign currency after President Recep Tayyip Erdogan ordered a series of aggressive interest rate cuts in the final months of 2021 despite soaring inflation.

The country’s deeply negative real interest rates have put heavy pressure on the Turkish lira, which lost around 45 per cent of its value against the dollar last year. Turkish authorities spent billions of dollars in the final weeks of 2021 in a bid to halt its freefall.

The deal