Qatari support ‘will not have major impact on Turkish lira’

Timothy Ash London-based strategist
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Updated 21 May 2020

Qatari support ‘will not have major impact on Turkish lira’

  • Turkey needs additional outside assistance, expert tells Arab News

JEDDAH: Turkey tripled its currency swap agreement with Qatar to $15 billion on the basis of existing currency arrangements in a bid to help steady the Turkish lira on Wednesday.

Turkey has also reportedly been seeking new or expanded swap lines with the US, the UK, China and Japan to forestall a potential currency spiral as the lira reached a record low earlier this month along with a depletion in the Central Bank’s net FX reserves.

However, Turkey has not yet reached an agreement with any of the G20 central banks with which it has been negotiating. Despite Qatar increasing its swap-line limit from $5 billion to $15 billion to enable Turkey to increase its foreign currency reserves, the Turkish economy remains in trouble. 

Timothy Ash, a London-based senior emerging markets strategist at Bluebay Asset Management, said the increase of the swap line from Qatar is unlikely to have a major impact.

“I think Turkey needs additional outside assistance — either G20 swaps or to resort to the International Monetary Fund (IMF). At the moment they are just buying time with the move to hike import tariffs,” he told Arab News.

Experts say that Turkey’s relatively high foreign debt obligations pushed it to diversify its overseas search for external funding rather than approaching the IMF. The ruling Justice and Development Party (AKP) will be keen to avoid having to deal with the IMF, having repeatedly criticized its predecessors for doing so.

Over the past few months, Turkey’s net foreign exchange reserves have fallen to under $10 billion. The current free fall in the lira’s value has only added to the country’s financial woes.

Wolfango Piccoli, co-president, political risk advisory at London-based Teneo, says that the $10 billion increase in its swap lines with Qatar only buys Turkey a little more time.

“These are the usual tricks that show the officials remain in denial,” he told Arab News. “It shows how reluctant policymakers are to face reality.”

Australian watchdog considers its own Google antitrust case

Updated 51 min 30 sec ago

Australian watchdog considers its own Google antitrust case

  • Competition and Consumer Commission launched Australian court action against Google in July

CANBERRA, Australia: Australia’s competition watchdog will consider its own antitrust case against Google, the commission chairman said Wednesday after the US Justice Department sued the company for abusing its dominance in online search and advertising.
Competition and Consumer Commission chairman Rod Sims described the US case filed Tuesday as one of the world’s biggest antitrust cases in the past 20 years.
“I’m delighted the D.o.J.’s taking it on and we’ll follow it really closely,” Sims told the National Press Club, referring to the US Department of Justice.
“We’re going to look at it and see whether there’s any value in what we might do,” Sims added.
Separately, Sims is drafting legislation to address the imbalance in bargaining power between Google and the Australian media businesses that want the tech giant to pay for journalism.
The bills, that will be ready to be introduced to Parliament by December, would empower an arbitrator to make binding decisions on how much Google and Facebook must pay media companies for news content.
Sims said his commission “had a lot of talk” with the US Justice Department before he released a report in July last year that recommended more government regulation on the market power of Google and Facebook that would ensure fair deals for other media businesses and more control for individuals on how their data was used.
Sim’s commission launched Australian court action against Google in July alleging the California-based company misled account holders about its use of their personal data.
The commission alleges the Google misled millions of Australians to obtain their consent and expand the scope of personal information that Google collects about users’ Internet activity to target advertising. Google denies the allegations.
In October last year, the commission sued Google in an Australian court alleging the company broke consumer law by misleading Android users about how their location data was collected and used. That case will be heard by the Federal Court next month. Google also denies that allegation.
Sims said Google was lobbying “every politician at Parliament House” ahead of draft legislation being introduced to make it pay for news.
Google has said the proposed laws would result in “dramatically worse Google Search and YouTube,” put free services at risk and could lead to users’ data “being handed over to big news businesses.”
Facebook has warned it might block Australian news content rather than pay for it.