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Turkey’s central bank continues window dressing with currency swaps

Hit by a foreign reserves drain, Turkey’s central bank eyes fresh currency swap deals, including with the central banks of Azerbaijan, Turkmenistan, Uzbekistan and Libya.
A picture taken on Dec. 7, 2021 in Istanbul shows Turkish lira banknotes.
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Creating and managing perceptions seems to have become a high priority for the government of President Recep Tayyip Erdogan, as it struggles to ease Turkey’s economic turmoil and reverse its sagging popular support ahead of elections next year. A case in point is the central bank and its depleted foreign reserves. Currency swap deals with friendly nations have become a tool to push up the bank’s gross reserve figures and gloss over the drain.

After the most recent currency swap deal, signed with the United Arab Emirates (UAE) last month, Al-Monitor has learned that preparations are underway at the central bank for similar deals with the central banks of the Turkic nations of Azerbaijan, Turkmenistan and Uzbekistan, as well as Libya, based on cooperation protocols signed in the past two years.

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