On Monday, Saudi Arabia announced it had signed an agreement with Turkey to deposit $5 billion in Turkey’s central bank, an influential increase as the economy grapples with inflation arising from last month’s massive earthquakes.
KSA defined the move as “a testament to the close cooperation and historical ties between the Kingdom of Saudi Arabia and the Republic of Turkey and its brotherly people.”
It also marks a demonstration of the Kingdom of Saudi Arabia’s commitment to supporting Turkey’s efforts to strengthen its economy and to promote social growth and sustainable development.”
the Saudi Fund for Development (SFD) said in a statement.
Mohammed bin Abdullah Al-Jadaan, Saudi Minister of Finance announced KSA’s intention to deposit. The announcement showed no details on how the cash would be used or if the kingdom could call for the sum to be returned. However, such deposits can help set up exchange rates for a nation’s currency against other currencies internationally.
Turkey’s net foreign exchange reserves recovered from over $6 billion last summer, when it was at its lowest in at least 20 years, while they have dropped some $8.5 billion since massive earthquakes hit Turkey’s southern region early in February.
The Central Bank of the Republic of Turkey’s (CBRT) net international reserves fell some $1.4 billion to $20.2 billion in the week of Feb. 24, data from the monetary authority showed on Thursday. The deposit will shore up Turkey’s foreign reserve and is possible to help further firm up the Turkish lira. The currency depreciated 30% against the U.S. dollar last year and 44% in 2021.
The decision, which is also expected to help Turkey combat inflation, was made on the order of King Salman and Crown Prince Mohammed bin Salman (MBS), the statement said.
The deposit will bolster the Turkish economy by addressing economic aspects across various sectors. By making this deposit, the Kingdom of Saudi Arabia is expressing its strong support for the Turkish people and its confidence in the future of the Turkish economy.”
Statement added.
The Saudi deposit follows joint efforts by Ankara and Riyadh to fix ties following years of anxiety, which escalated especially after the 2018 murder of dissident Saudi journalist Jamal Khashoggi in Saudi Arabia’s Istanbul Consulate. The deposit was signed between SFD Chairperson Ahmed Aqeel Al-Khateeb, who is also Saudi Arabia’s tourism minister, and CBRT head Şahap Kavcıoğlu, the SFD statement said.
