Qatar Offers Turkey $10Bn to Curb Lira’s Collapse

Qatar Offers Turkey $10Bn to Curb Lira’s Collapse
TT
20

Qatar Offers Turkey $10Bn to Curb Lira’s Collapse

Qatar Offers Turkey $10Bn to Curb Lira’s Collapse

Turkey’s Central Bank has received $10 billion from a currency swap agreement it secured with Qatar on Wednesday, according to the bank’s analytical balance sheet on Friday.

The bank announced on Wednesday it struck a deal to increase its currency-swap agreement with Qatar to $15 billion from five billion dollars, providing some much-needed foreign funding to reinforce its depleted reserves and shore up the Turkish lira.

Ankara had urgently appealed to Qatar and China about expanding existing swap lines, and to the United Kingdom and Japan about possibly establishing them.

As Turkey ran down its hard currency buffers this year, it lobbied Group of 20 nations to be included in swap lines like those the US has extended to other emerging economies.

The government has been on ongoing negotiations with G20 nations since April 10, without reaching any solution.

So far unable to reach arrangements with the central banks of G-20 nations, Turkey resorted to Qatar.

The agreement between both countries was concluded in 2018, when the lira lost 40 percent of its value.

Analysts attributed the swap negotiation crisis between the Turkish central bank and other central banks to the Turkish central bank’s lack of independence.

The US Federal Reserve has refused to negotiate with the Turkish Central Bank due to Erdogan's continued interference in the bank's policies.

President of the Federal Reserve Bank of Richmond Thomas Barkin earlier stated that the Federal Reserve had swapped lines with countries that have a relationship of “mutual trust” with the United States and the highest credit standards.

It has opened the taps for central banks in 14 countries to access dollars. These are Australia, Brazil, South Korea, Mexico, Singapore, Sweden, Denmark, Norway and New Zealand, Canada, England, Japan, Switzerland, and the European Central Bank.

In this context, Turkey’s Banking Regulation and Supervision Agency (BDDK) has announced it would exempt Euroclear Bank and Clearstream Banking from recently-imposed limits on lenders’ lira transactions with foreign financial institutions.

This step is aimed at protecting the clearing of lira-denominated bonds and Sukuk and ensuring Turkish lira securities are traded efficiently, the BDDK noted.

The country’s 12-month foreign debt obligations are $168 billion, with about half due by August, while disappearing tourism income has inflated its monthly current account deficit to nearly $5 billion.

Last week, the Central Bank lowered its one-week repo rate by 50 base points, in line with market expectation.

A statement said the bank's Monetary Policy Committee had decided to reduce the policy from 8.75 percent to 8.25 percent.

Since the beginning of this year, the bank has cut the rate by a total of 375 basis points.

In 2019, the bank reduced the rate gradually by 1,200 basis points to 12 percent from 24 percent.



Dollar Eyes Weekly Rise into US-China Trade Talks 

A clerk sorts US hundred-dollar notes at the headquarters of Hana Bank in Seoul, South Korea, 08 May 2025. (EPA/Yonhap)
A clerk sorts US hundred-dollar notes at the headquarters of Hana Bank in Seoul, South Korea, 08 May 2025. (EPA/Yonhap)
TT
20

Dollar Eyes Weekly Rise into US-China Trade Talks 

A clerk sorts US hundred-dollar notes at the headquarters of Hana Bank in Seoul, South Korea, 08 May 2025. (EPA/Yonhap)
A clerk sorts US hundred-dollar notes at the headquarters of Hana Bank in Seoul, South Korea, 08 May 2025. (EPA/Yonhap)

The dollar headed for a weekly gain on most major peers on Friday as a US-UK trade deal raised hopes of progress in looming US-China talks, while bets of imminent Fed rate cuts receded after the central bank indicated it was in no hurry.

Financial markets are heading into the weekend with the focus squarely on trade negotiations between Washington and Beijing due to begin on Saturday in Switzerland.

The euro touched a one-month low of $1.1197 in Asia and was down about 0.6% for the week. The yen has weakened about 0.4% this week and hit a one-month trough of 146.18 per dollar, before steadying around 145.48 on Friday.

Sterling, which had rallied on news reports of an impending US-UK trade deal, gave back gains when the agreement turned out to be pretty limited and struck a three-week low of $1.3220 in early trade on Friday.

The "general terms" agreement modestly expands agricultural access for both countries and lowers prohibitive US duties on British car exports, but leaves in place the 10% baseline.

"The market reaction of buying USD may reflect greater optimism that such tariff deals are doable," said Steve Englander, global head of G10 currency research at Standard Chartered, in a note to clients.

"Trump's dangling of the prospect of a trade detente with China may be adding to optimism that the global disruption from trade wars may not be as severe as markets have feared," he said.

"For the time being, G10 markets would be relieved if US and China bilateral tariffs were rolled back, even if they remain well above January 19 levels."

Bitcoin has surged back above $100,000, reflecting a refreshed appetite for risk-taking in markets' more speculative corners.

Announcing the UK deal, Trump said he expects substantive negotiations between the US and China this weekend and that tariffs on Beijing of 145% would likely come down.

The administration is weighing a plan to slash the tariff on Chinese imports by more than half, the New York Post reported, citing unidentified sources, though the White House dismissed that as speculation.

The Australian dollar headed for its first weekly drop in a month, with a 0.7% fall to $0.6407. The New Zealand dollar was likewise lower, clinging to support at $0.5895, just above its 200-day moving average.

On the central bank front this week moves were as expected with the Bank of England cutting, while Sweden, Norway and the United States left rates on hold.

However, Federal Reserve Chair Jerome Powell's remarks, emphasising the level of uncertainty, were taken as reducing the likelihood the Fed lowers rates any time soon and market pricing for a cut in June has drifted to about 17% from about 55% a week ago.

In contrast with G10 peers, the dollar was lower on several Asian currencies this week after a shock surge in the Taiwan dollar.

After a volatile few days it has settled around 30 to the dollar, more than 6% stronger from where it had finished April. The Singapore dollar is not far from decade highs. The Hong Kong dollar has retreated from the strong side of its band after heavy intervention from the Hong Kong Monetary Authority.

India's rupee opened under renewed pressure on Friday as conflict between India and Pakistan escalates. It dropped sharply on Thursday and, at 85.55 to the dollar, is eyeing its heaviest weekly fall since 2022.