The central banks of Qatar and Turkey have signed a currency swap agreement to provide liquidity and support for financial stability, Qatar’s central bank said.
The agreement, aimed to enhance bilateral cooperation, was signed by the heads of the two central banks on Friday, and will establish a two-way currency exchange line, the bank said on Sunday in a statement posted on its website.
It will also facilitate exchange of trade between Turkey and Qatar, and contribute to enrichment of reserves of both countries.
The funding for the first phase of the deal is expected to be worth $3bn.
In a currency swap, the first party borrows a specified amount of foreign currency from the counterparty, while at the same time, lending a corresponding amount to the counterparty in the currency that it holds.
The agreement was the first step in a $15bn investment pledge by Qatar’s Emir Sheikh Tamim bin Hamad Al Thani into Turkey’s financial markets and banks, which was announced last week.
Qatar and Turkey are bound by strategic relations at the political, economic and military fronts.
Turkey is currently grappling with a currency crisis and heightened tensions with the United States, its NATO ally.
The lira has been sliding for months, but its recent plunge began after US President Donald Trump announced on Twitter a doubling of steel and aluminium tariffs.
The lira subsequently lost almost a quarter of its value in two days, with Trump’s move adding pressure on an economy already roiled by high inflation, which is approaching 16 percent.