Yesterday, Tuesday, a spokesman for the Saudi Ministry of Finance said that the Kingdom and Turkey are discussing Riyadh’s deposit of $5 billion in the Turkish Central Bank.
We are in discussion in the final stage of depositing $5 billion with the Central Bank of Turkey, the spokesman said in an email response to a Reuters query.
Turkey's central bank declined to comment on the matter.
An informed Turkish official said that discussions are in their final stage with Saudi Arabia regarding a swap or deposit agreement with the Turkish central bank.
The Turkish economy is under severe pressure in light of the lira's decline and inflation rising by more than 85 percent. A swap or deposit agreement would support Turkey's diminishing foreign currency reserves.
This comes as the two countries seek to strengthen relations between them, which were damaged in the wake of the killing of Saudi journalist Jamal Khashoggi in 2018 in the Turkish capital, Istanbul.
Analysts believe that the Gulf support may help the Turkish president to mobilize support before the presidential elections next year, according to Reuters.
Instead of raising interest rates to re-attract hot money, especially in light of record high inflation, Erdogan and the Central Bank of Turkey are following an economic plan based on encouraging industry and increasing exports by reducing interest.
The Turkish president expects that this will support the lira and address the inflation crisis by increasing investments and creating job opportunities, according to media reports.
