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Erdogan says Gulf states sent cash to boost forex reserves

REUTERS/Umit Bektas/
Ankara has secured some $28 billion in currency swap deals in recent years

Turkish President Tayyip Erdogan said Gulf states recently sent funding to Turkey, briefly helping relieve the central bank and markets and he intends to meet and thank their leaders after Sunday’s runoff presidential election.

“Our economy, banking and financial system are quite strong. Meanwhile, some Gulf states and such stocked money in our system. This is recent and this relieved our central bank and market, even if for a short while,” Erdogan said in an interview with CNN Turk.

“After Sunday’s election, you will see how these leaders will come here and how I will visit them to show gratitude,” he added.

Erdogan, seeking to extend his two-decade rule in the Sunday vote, did not name the countries nor specify when or how much funding arrived in Turkey.

Ankara has secured some $28 billion in currency swap deals in recent years with the UAE, Qatar, China and South Korea, most of which are believed to be in the Turkish central bank’s reserves.

The foreign funds have offset declines in the bank’s forex reserves, which on a net basis dropped into negative territory last week for the first time since 2002 – the year Erdogan’s AK Party was first elected.

Turkey’s forex buffer has been depleted partly due to years of an unorthodox policy of stabilising the lira currency, which has undergone a series of crashes sparked by interest rate cuts in the face of soaring inflation.

Instead of swap deals with foreign counterparts, Turkey’s central bank has recently preferred depo accounts, which involves dollars or euros entering the system instead of local currencies.