Turkey’s central bank said on June 19 that it had used a Chinese yuan funding facility for the first time under an existing swap agreement with the People’s Bank of China. Turkish companies in various sectors the previous day paid, via banks, their import bills from China using yuan, it added.
A stark deterioration in the central bank’s foreign exchange reserves, partly caused by state bank interventions to prop up the embattled Turkish lira (TRY), has in recent weeks intensified concerns that Turkey was in sore need of securing additional foreign funding. In May, the central bank was known to be pursuing possible swap lines with the central banks of England and Japan and an expansion of its existing swap lines with Qatar and China.
Announcing the initial use of the funding facility for the Chinese currency—usually referred to as yuan (CNY), but sometimes referred to as the renminbi (RMB) and occasionally, by traders, as the redback—the central bank added that the move would strengthen financial cooperation between Turkey and China. Commercial banks would be able to add products related to trade and financial activities with a strategy based on the swap agreement, it said.
Turk Telekom, the country’s largest telecom company, said that it was among the companies that had used the mechanism provided by Turkey and new swap agreement to cover import payments, state-run news service Anadolu Agency reported.
The central bank said that it would continue to support the use of local currencies in international trade payments.
Turkey’s central bank said on June 19 that it had used a Chinese yuan funding facility for the first time under an existing swap agreement with the People’s Bank of China. Turkish companies in various sectors the previous day paid, via banks, their import bills from China using yuan, it added.
