Qatar, Turkey Central Banks Seal Currency Swap Agreement

by Ike Obudulu Posted on August 20th, 2018

Doha, Qatar : The central banks of Qatar and Turkey have entered a currency swap agreement aimed at providing liquidity and support for financial stability, Qatar’s central bank  announced on Sunday, several days after Doha promised to give Turkey $15 billion in support.

The deal, signed by both central banks’ directors, will create a two-way currency exchange line, which will in turn bolster Turkey’s currency.

The Turkish lira has lost about 30 percent of its value against the US dollar since the beginning of August. The currency crash occurred in the wake of tensions with the United States. The detention of Andrew Brunson, an American pastor, in Turkey has cast doubts over the future of Ankara’s partnership with Washington.

On Friday, UAE State Minister for Foreign Affairs Anwar Gargash hit out at Qatar’s pledge to direct investment in Turkey.

In a post on his Twitter page, Gargash referred to a recent visit to Ankara by the Qatari emir and his pledge to help Turkey overcome an ongoing currency crisis and described it as an attempt to “buy sovereignty”.

“Full sovereignty cannot be bought with money but is achieved by establishing sincere and reliable relations with surrounding countries,” Gargash said in his tweet, the daily Gulf News reported.

The emir of Qatar arrived in Turkey on a “working” visit aimed at strengthening mutual cooperation.

In a “private” meeting, Turkish President Recep Tayyip Erdogan and Sheikh Tamim discussed bilateral relations and ways to expand the existing strategic ties between the two sides in various fields.

During the meeting, Qatar pledged $15 billion in direct investments in “Turkey’s financial markets and banks”, Turkish officials said.

The announcement helped the Turkish national currency lira recover from record lows against the US dollar.

Only one day after Qatar pledged the investment, the lira strengthened some 4 percent against the greenback to around 5.75 per dollar.

Media outlets close to the UAE and Saudi Arabia quoted “analysts” as saying that Qatar had been “forced” to make the investment pledge in exchange for keeping the Turkish military base and Turkish soldiers on its soil.

On August 10, US President Donald Trump announced that his administration was doubling steel and aluminum tariffs on Turkey. The move came as part of the US’ reaction to Turkey´s two-year-long detention of an American pastor over terrorism charges.

In retaliation, Erdogan raised tariffs on some American commodities, and called on Turkish people to boycott US-made electronic goods, including Apple’s iPhones.

US-Turkish bilateral relations have deteriorated over the imprisonment of US pastor Andrew Brunson, arrested in Turkey on suspicion of ties to the Gulen movement, which is accused of orchestrating the 2016 failed military coup in the country. The pastor was since released from prison in late July and placed under house arrest.

In early August, Washington froze the assets of Turkish Justice Minister Abdulhamit Gul and Interior Minister Suleyman Soylu over their alleged “leading roles” in Brunson’s imprisonment, as well as other human rights abuses.

On Thursday, US Treasury Secretary Steven Mnuchin said the United States might take more action against Ankara if Turkey did not release Brunson soon.

Trump said in an Oval Office interview that he thought he had a deal with Turkish President Recep Tayyip Erdogan after he worked to help him free a Turkish citizen being held in Israel. In return he thought Erdogan would then release pastor Andrew Brunson, who has been held in Turkey since 2016.

“I think it’s very sad what Turkey is doing,” he said during the interview. I think they’re making a terrible mistake. There will be no concessions,” he said.

Ankara has denied ever agreeing to release Brunson.

In July, Trump and Erdogan met in Brussels during the NATO summit to discuss how to win Brunson’s release, a senior White House official said earlier.

Trump said he kept his side of the bargain.

“Until now I had a very good relationship as you know with the president,” Trump said.”I got along with him great. I had a very good relationship. But it can’t be a one-way street. It’s no longer a one-way street for the United States.”

Author

Ike Obudulu

Ike Obudulu

Versatile Certified Fraud Examiner, Chartered Accountant, Certified Internal Auditor with an MBA in Finance And Investments who has both worked for and consulted with some of the world's largest companies on main street and wall street in over 20 countries, Ike brings his extensive reporting and investigations experience to bear on his role as Chief Editor.
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