According to the statement made by the Bank of Korea (BOK), a swap agreement of 2.3 trillion KRW or 17.5 billion TRY was signed with the Central Bank of Turkey. According to the agreement;
· The swap agreement will last for three years.
· The two parties can discuss the extension of the agreement after its expiration.
· The agreement is expected to increase the stability of trade between the two countries and help strengthen the financial safety net by reducing dependency on the USD in the long run.
After China and Qatar, we thought that the possible swap agreement could be of Asian origin. South Korea; It is a country that creates added value, makes high-tech production and exports, and has a stable economy. The USD equivalent of the swap agreement is approximately 2 billion USD. In other words, KRW, which will enter the CBRT reserves with swaps, will add 2 billion USD to the gross reserves. 6 billion USD (CNY equivalent) was received from the Chinese swap agreement, and 15 billion USD (QAR equivalent) from the Qatar swap agreement. Since the counter currencies entering the reserves are not “hard currencies”, they must be converted to USD for their use and effectiveness and calculated over their USD equivalent. Once the swap agreement expires, the exchanged currencies will be exchanged again in the opposite direction. In other words, the reserve effect in swaps is actually temporary and is a “currency loan” effect.
One function is, of course, on the development of trade in local currencies. In other words, helping local currency conversion by reducing the weight of USD or “hard currency” based trading. This can contribute to the overall trade volume. We have a total trade volume of 7 billion USD with South Korea. We have a trade deficit of 4.4 billion USD to this country, so we are the party that imports more. In trade in local currencies, an equal balance of trade is desirable. Therefore, Turkey should increase its exports and potential in terms of the trade volume that can increase.
Although we do not expect any interest rate changes from the Central Bank today, we will look at the balance of the policy statement a little more, especially in the light of increasing inflation risks and current assessments.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
