Turkey strikes currency swap deal with UAE as ties warm

Turkey and the United Arab Emirates said on Wednesday they had agreed a nearly $5-billion swap deal in local currencies, in a sign of warming diplomatic relations.

The agreement between the countries' central banks comes after the regional rivals sought in recent months to repair relations that were badly strained in the wake of the 2011 Arab Spring uprisings.

Turkey could tap the foreign currency to bolster its reserves, which on a net basis are at a two-decade low, after the central bank began costly market interventions last month to prop up the tumbling lira.

The two central banks said in a statement the accord was for three years with the possibility of extension. Its nominal size is 64 billion lira ($4.71 billion)and 18 billion dirham.

"This agreement demonstrates the two central banks' commitment to deepen bilateral trade in local currencies in order to advance economic and financial relations between our countries," said Turkish Central Bank Governor Şahap Kavcıoğlu.

Last month Reuters reported, citing officials, that the Turkish central bank was wrapping up talks with its UAE and Azeri counterparts with at least one deal likely soon.

The accord follows a visit by Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahyan to Turkey in November, when preliminary talks on a swap deal took place.

Turkey has swap deals with China, Qatar and South Korea worth about $23 billion.