ISTANBUL, Reuters – Turkish and United Arab Emirates announced Wednesday that they have reached a $5 billion swap agreement in local currencies. This is a gesture of warm diplomatic ties. It provides financial assistance to Ankara in its economic crisis.

The agreement between central banks of these countries was reached after regional rivals tried repair relationships that had been badly damaged in the aftermath of 2011 Arab Spring rebellions.

Turkey could use foreign currency to increase its reserves. The country’s net currency levels are now at their lowest level in two decades after central bank market interventions were made last month.

At 13.6 GMT, the lira was 0.5% less than last year’s 44% drop.

The agreement is expected to last three years, with an option for extension. Its nominal value is 64 billion lire, and 18 trillion dirham.

The statement was signed by Sahap Kavcioglu (Turkish Central Bank Governor), which stated that “this agreement demonstrates both central banks’ dedication to deepen bilateral trading in local currencies in order for to advance economic, financial relations between our nations.”

Last month, Reuters, citing official sources, reported that negotiations between Turkey’s central bank and its UAE- and Azeri counterparts had been concluded with at least one deal expected soon.

After a November trip by Abu Dhabi Crown Princess Mohammed bin Zayed al–Nahyan and Turkish officials, the accord came as a result of preliminary negotiations between Kavcioglu and UAE officials regarding a swap deal.

Swap deals between Turkey and China, Qatar, South Korea and Qatar are valued at around $23 billion.

Turkey has had a shrinking foreign currency reserve since 2019-2020’s series of currency market intervention in which approximately $128 million was sold through state banks, supported by the central banking. Reuters reports that Ankara sought to make swap agreements with Russia, the United States and Malaysia at the time.

On Jan. 7, the central bank’s net foreign reserves dropped to $7.95 Billion – their lowest point since 2002, when they were $8.34 Billion a week before.

($1 = 13.5307 liras)