Turkey – Qatar swap deal and other possible deals

CBRT increased the current swap deal with Qatar CB to 15 billion USD equilavent. The 5 billion USD swap deal between the two central banks in 2018 was thus extended by another 10 billion USD.

Swap deal between Turkey and Qatar, is not a USD swap. A deal over the local currency, ie QAR ise given to CBRT and TRY as well to QAR as collateral. Swap transactions are made as a reciprocal currency exchange on a certain maturity and the opposite is done at the end of the term. Of course, while the swap obligation is closed according to the terms of the agreement and market conditions, there is also a certain interest payment. In my opinion, the swap agreement with Qatar will contribute to the reserves and to improve the foreign trade between the two countries through local currencies. The USD liquidity conditions we want are not provided because QAR is not convertible against USD.

For this, it is more important to make a swap agreement from a central bank within the G7 (except China). The news of BOE and BOJ is therefore important, as these central banks have a direct swap line with the Fed, they can play a distributive role in USD swap. Even if there is no direct USD swap, GBP and JPY can provide access to short-term liquidity as they are convertible. This is how we will see the effects in terms of exchange rate, market and foreign debt financing. Of course, the swap is a temporary transaction, and the foreign currency received as collateral at the end of the term must be repaid, ie the reverse of the first swap transaction. Therefore, the main thing to be provided is being able to provide natural foreign currency inflow with confidence and stability factors.

Source: Tera Menkul
Hibya News Agenc