Turkey close to reaching deal with Azerbaijan on FX swap, in talks with Russia, Britain

Azerbaijan appears slated to become the first country, among a number of candidates, that Turkey secures a currency swap agreement with, Reuters reported on Wednesday, citing Turkish sources with knowledge on the matter.

Ankara is holding talks with Malaysia, South Korea, Russia, Britain and other countries in Asia on securing swap agreements, the four sources told the agency.

Turkey’s central bank Governor Şahap Kavcıoğlu on Tuesday announced that Turkey was in talks for currency swap agreements with a number of countries, and Ankara was close to reaching a deal with two.

Turkey’s foreign currency reserves saw excessive depletion under Turkey’s former Finance Minister Berat Albayrak, who is President Recep Tayyip Erdoğan’s son in law. The reserves dropped by 75 percent last year, prompting concerns about a possible balance of payments crisis, which Ankara has dismissed.

Earlier this month, Turkey's central bank agreed with China to increase an existing currency swap facility to $6 billion from $2.4 billion, in a bid to boost foreign reserves. The move followed an agreement last for Turkey to triple its currency-swap agreement with Qatar to $15 billion.

“There have been talks with South Korea and Russia on swaps for some time. Azerbaijan and Malaysia are also among the important countries with which talks are underway,” one senior source told Reuters. “There may be a swap agreement with one or more of these,” the person said.

The talks with Azerbaijan were “the closest to a deal,” another source said, adding,“both Turkey and Azerbaijan have a positive approach to this agreement’’.

One source told Reuters that Ankara might also further expand the accord it maintains with regional ally Qatar.