Turkish central bank used Chinese yuan funding for first time

Turkey’s central bank said on Friday it had used a funding facility for Chinese yuan for the first time under a prior swap agreement with the People’s Bank of China.

In the recent transaction, Turkish companies in various sectors paid, via banks, their import bills from China using yuan, the central bank said.

It added that the move would strengthen cooperation between Turkey and China, and that commercial banks would be able to add products related to trade and financial activities with a strategy based on the swap agreement.

A fall in the Turkish central bank’s foreign exchange reserves, partly caused by state bank interventions to prop up the lira, has raised concerns that Turkey would need foreign funding.

Reuters reported in May that the central bank was making efforts to establish swap lines with the central banks of England and Japan and expand its existing swap lines with Qatar and China.

The tripling of the swap line with Qatar to $15 billion equivalent in local currencies last month led to an $8 billion rise in the reserves, but analysts said it was far from meeting the country’s needs.

Credit: Reuters