In the face of increasing US sanctions against the country, Turkey has found an unlikely ally in Qatar. Just recently president Trump placed tariffs on steel and aluminum imports from Turkey in violation of standing agreements. The tariffs are already at 20% and 50% respectively. Ankara has responded by placing their own tariffs on a few US goods including rice, cars, alcohol, coal and cosmetics.
Thus far America’s actions have kicked off a currency crisis in the country which was already looming due to several factors, including mismanagement by the Turkish government. The action has reduced the value of the Lira dropping to a low dip near the mid of August. Loss of confidence in the currency has led to many investors pulling their investments out of the country. Any repatriated profits would have significantly dropped as well.
Ankara has already filed a complaint with the World Trade Organization seeking remedy for the situation, as other victims of unlawful US tariffs have as well.
Initially, the response from the government was to ask the Turkish population to sell any USD they had in exchange for Lira. This would boost the demand for the currency thus increasing its value. The measure was not intended to be a solution to the problem. It was a temporary measure to stave off the immediate crash in value.
Now Turkey has a long-term plan to deal with the problem. They’ve found an ally in Qatar who has been under an economic blockade by several of its neighbours led by Saudi Arabia. The two countries have engaged in a currency swap.
Essentially, the two countries will swap loans by purchasing the other’s currency in equal amounts. That money will then be used for trade between the two countries. It has already been reported that the first phase of purchasing will reach $3 billion. With this plan in place, the purchasing will increase the demand and thus the value of both the Lira and the Qatari Riyal.
It is the hope of Ankara and Doha that this plan will help both countries deal with their respective economic situations. In the light of US economic aggression against Turkey, it seems they’ve been forced to seek new ties with others.