Turkey’s quest for SWAPs ongoing

The liquidity problems experienced in Turkey, along with the economic cost of the pandemic, compelled Turkish government to seek swap deals with other central Banks, instead of initiating reforms. While the priority is  a  swap line opened by the FED, negotiations with different countries continue.

“We are talking with China, we already have an existing swap agreement,” said Trade Minister Mrs Ruhsar Pekcan. Negotiations with South Korea, Malaysia, India and Japan continue.”

The coronavirus epidemic devastated all the world economies. Turkey was also one of the countries affected  badly by the epidemic. The impact  was felt acutely in the capital account, with foreign exchange reserves falling rapidly YTD. Turkey, is in constant negotiations with US Central Bank (FED) to secure swap lines to tide the economy over the epidemic. There is no clear statement from the parties regarding the negotiations with the FED. British press wrote that Turkey is not likely to make the swap deal with Great Britain and Japan and stated that the $ 10 billion deal was not confirmed. British officials were surprised by the news about the agreement with Turkey and said it would be unlikely that such a deal will be done.

Minister of Trade Ruhsar Pekcan told the TRT News, the state  broadcasting channel that the quest for SWAP lines is very much on, which accentuates the fact that Ankara feels insecure about a balance of payments crisis. Pekcan, said “There are 5 countries that we have started negotiations with and followed closely,” she said. “We are discussing with China, we already have an existing swap agreement, we need to make it more workable, updated and increase its capacity. We are meeting with South Korea, we have both a free trade agreement and a trade deficit with them, and negotiations with them continue in this direction. Apart from that, there are Malaysia, India, Japan. We are meeting with both business councils and our business people who have investments in trade here to lobby. ”

In a statement made 2 weeks ago, the Central Bank announced that the amount of swap agreement with Qatar on 17 August 2018 has been increased to Turkish lira and Qatar Rial for 5 billion dollars and Turkish lira for 15 billion dollars.


According to the President’s decision published in the Official Gazette, the tax rate on FX fund proceeds was hiked to 15 percent from 10 percent for real persons and  legal entities, aiming to increase tax income and reduce the demand for foreign currency. Investors who invest in foreign currency through the funds are taxed on foreign currency earnings, and investors who invest in TL are taxed on TL earnings. According to the statement made by the Capital Markets Board, debt instruments and lease certificates issued abroad in foreign currency can be included in the portfolio of FX funds through initial offerings.

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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.