Duvar English

Turkey’s central bank governor Murat Uysal is said to have held a phone call with Federal Reserve chair Jerome Powell, according to Turkish media outlets on July 3.

The phone call reportedly took place on May 1, when the Turkish Lira had lost considerable value against dollar. The content of the phone call has not been revealed.

Turkey’s central bank was at the time very much in need of foreign funding to reinforce its depleted reserves and help steady the Turkish lira. Ankara had been urgently seeking access to funds worth tens of billions of dollars.

The Fed’s statement in May pointed out that a US swap line with Turkey was unlikely to happen. Asked about extending swap lines to Turkey, Richmond Fed President Thomas Barkin said that the Federal Reserve opens swap lines with countries that have a relationship based on “mutual trust” with the US.

“It does not cover all the countries,” Barkin said on May 6.

In an interview on May 13, the New York Fed’s former chief said that Turkey’s foreign cash needs are not the sort of thing the U.S. Federal Reserve is likely to relieve given its economic challenges and volatile diplomatic relations with the United States.

William Dudley, who from 2009-2018 was vice chair of the U.S. central bank’s policy-making committee and ran its New York branch that oversees foreign funding, said “there is definitely a significant reluctance” to expanding the dollar swap lines.

Turkey’s central bank later started to look elsewhere for the funds, announcing on May 20 that it secured a tripling of its currency-swap agreement with Qatar to $15 billion.

Although this has been a relief for Turkey in the short-run, analysts point out that the country is still much in need of further funds.