“At tomorrow`s meeting, the 50-point interest rate cut, which is market anticipation, could change, especially with the increase in swaps,” said Ferhat Yakselt-rk, co-founder of Econs. The previous agreement, worth $3 billion, was signed in August 2018, after Qatar promised a $15 billion investment package for Turkey. The lira, which started Wednesday between 6.78 and 6.79, rose against the dollar, with news of the new swap deal at its highest since mid-April. With the opening of the markets, the exchange rate rose to 6.79 levels. He added that Turkey had no intention of negotiating swap lines with the International Monetary Fund (IMF). Last year, following an official visit by President Recep Tayyip Erdogan, the Turkish and Qatari central banks agreed to increase the volume of a monetary sweaquage agreement to $5 billion. In a statement, the Turkish Central Bank said the two countries had extended a swap agreement reached for the first time during Turkey`s 2018 currency crisis and reaffirmed the close ties between President Recep Tayyip Erdogan and the wealthy Gulf nation. Tatha Ghose, an analyst at Commerzbank, said the lira had focused on speculation about deals with Tokyo and London, but added that the swaps were a “secondary story” for the prospects for a recovery in Turkish exports, as European economies reopened from coronavirus barriers. Over the past eight days of trading, the TRYTOM-D3 read has focused on expectations of new financing that would limit previous sales in the lira, which some analysts have said could intensify as in 2018, when the Turkish currency crisis rocked emerging markets. Turkey`s central bank said the change to the ceiling of the 2018 swap agreement with the Central Bank of Qatar was aimed at “facilitating bilateral trade” with local currencies and “supporting the financial stability of both countries.” Meanwhile, economists said information on swap agreements could influence the level of the interest rate cut, which is expected to reach 50 basis points to 8.25 percent at the fifth meeting of the CBRT`s Monetary Policy Committee (MPC), which expires on Thursday. Turkey has moved away from its preferred source of dollar financing, the U.S. Federal Reserve, which seems unlikely to extend a swap line based on comments from current and former Fed officials.
There is optimism about possible exchange deals with foreign banks that are helping the Turkish lira recover against the U.S. dollar, after the currency recently hit a record high of 7.27 on May 7. Turkey is in talks to set up swap lines with G20 members, with more than one possible swap line, Albayrak said in early May. Turkey`s net foreign exchange reserves have fallen this year from $40 billion to $26 billion and its public debt stands at $168 billion. The government is seeking partnerships overseas to secure funding to balance the books, Reuters reported last week. Analysts fear a new currency crisis similar to that of August 2018, when the lira lost half its value. Discussions were held with Japan and the United Kingdom with a view to the creation of new exchanges. The official said Treasury and central bank officials have held bilateral talks in recent days with counterparts from Japan and the U.K.