August 15, 2018 / 3:56 PM / 3 months ago

Qatar to invest $15 billion in Turkey; source says banks the focus

ANKARA (Reuters) - Qatar pledged $15 billion of investment in Turkey on Wednesday

Turkish President Tayyip Erdogan meets with Emir of Qatar Sheikh Tamim bin Hamad al-Thani in Ankara, Turkey August 15, 2018. Kayhan Ozer/Presidential Palace/Handout via REUTERS

that a government source in Ankara said would be channeled into its banks and financial markets.

The investment package was announced after Qatar’s Emir Tamim bin Hamad Al-Thani met President Tayyip Erdogan in the capital, as Turkey grapples with a collapsing lira and a worsening commercial and political standoff with NATO ally the United States.

The currency TRYTOM=D3 has lost nearly 40 percent against the dollar this year, driven by worries over Erdogan's growing influence on the economy and his repeated calls for lower interest rates despite high inflation.

Its precipitous decline has raised concerns about the resilience of Turkey’s banking sector and caused ructions on global markets.

Following the Qatar news, the lira firmed briefly to 5.8699 from 6.04 to the dollar, before easing back to 6.0500 by 1658 GMT.

The currency had rebounded some 6 percent on Wednesday after the central bank squeezed lira liquidity in the market, effectively pushing up rates and supporting the currency.

Turkey and Qatar have traditionally maintained good ties.

Ankara stood by Doha after Saudi Arabia and other Arab states severed diplomatic, trade and travel ties with Qatar last year, accusing it of financing terrorism, a charge Doha denies.

Qatar’s royal court released a statement saying Al-Thani “issued directives that will see the State of Qatar to provide a host of economic projects, investments, and deposits” worth $15 billion to support the Turkish economy.

Erdogan’s spokesman praised Qatari-Turkish relations on Twitter. “The fundamentals of the Turkish economy are robust and Turkey will emerge stronger from this process,” Ibrahim Kalin wrote.

Reporting by Orhan Coskun, Writing by Sarah Dadouch, Additional Reporting by Ghaida Ghantous; Editing by Dominic Evans and John Stonestreet

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