Today, the Central Bank of the UAE and the Central Bank of Turkey signed a bilateral agreement to exchange

Currency exchange agreement between Turkey ...

Date:Wednesday, January 19, 2022

Today, the Central Bank of the UAE and the Central Bank of Turkey signed a bilateral agreement to exchange

Currency exchange agreement between Turkey and the UAE

The Central Bank of the Emirates and the Central Bank of Turkey signed today a bilateral agreement to exchange currencies between the UAE dirham and the Turkish lira.
The face value of the swap agreement is 18 billion dirhams and 64 billion Turkish liras.

The agreement aims to enhance financial and trade cooperation between the two countries, and its term is valid for three years, with the possibility of extending it through a joint agreement.

The agreement was signed by Khalid Muhammad Balama, Governor of the Central Bank of the Emirates, and Shihab Kocioglu, Governor of the Central Bank of the Republic of Turkey.

Khaled Muhammad Balama said, "The signing of the agreement with the Central Bank of the Republic of Turkey reflects the two countries' keenness to enhance bilateral cooperation in financial matters, especially in the trade and investment fields."

For his part, Professor Shihab Kocioglu said: "The signed swap agreement confirms the commitment of the UAE Central Bank and the Central Bank of Turkey to promoting bilateral trade in local currencies in order to push forward the economic and financial relations between our two countries."

$10 billion fund

It is noteworthy that in November 2021, the United Arab Emirates announced the establishment of a $10 billion fund to support investments in Turkey.

The fund will focus on strategic investments, especially the logistical sectors, including energy, health and food.


Turkish welcome

In previous statements last November, Turkish Trade Minister Mehmet Muş praised Turkey and the UAE's trade and economic capabilities.

He believed that deepening economic and trade relations between Turkey and the UAE, at various levels, would be in the interest of both countries. He added, "I think that developing the existing cooperation between Turkey and the UAE is very important in terms of forming a model for the rest of the countries in the region, and a catalyst for regional stability."

He called on Emirati investors and businessmen to invest in his country, which he said is characterized by a distinguished regional and international position in terms of investment opportunities.



Turkish economy

Despite the currency turmoil, the central bank cut interest rates within two months 3 consecutive times, from 20 to 14%. Although each reduction led to a drop in the price of the Turkish lira, Turkish President Recep Tayyip Erdogan did not back down from his plan.

The volume of Turkish exports rose to more than 230 billion dollars, while the budget deficit fell to its lowest level.

Erdogan promised to compensate depositors of the Turkish currency for their losses due to the fall of the lira, to compensate for all the losses that the lira suffered last November compared to the dollar and the euro.

The price of the dollar fell from 18.5 to 13.59 Turkish liras, after the lira lost 44% of its value against the dollar last year, but there are expectations that this decline will continue and the price of the dollar will fall even more. As such, the Ministry of Finance will not have to pay any compensation to depositors as promised.

Erdogan said that his country is working to restore confidence in the Turkish lira, which has fallen to record levels during the last period.

In his statements on Tuesday, he promised again a decline in inflation figures during 2022.

Inflation reached a 19-year high of 36 percent in December after the central bank cut interest rates under pressure from Erdogan, causing a currency crisis.

Despite government officials' pledges to bring down inflation quickly, economic analysts say it could exceed 50 percent in the coming months and remain high throughout the year.

The currency crisis was halted last month thanks in part to costly currency interventions and government incentives to reduce the attractiveness of the dollar to savers.

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