Turkish lira strengthens as Turkey, UAE agree to $5B currency swap

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• iShares MSCI Turkey ETF (NASDAQ:TUR) climbs 6.5% after Turkey's central bank and the Central Bank of the United Arab Emirates agree to a bilateral currency swap between the UAE Dirham and the Turkish lira.
• The Turkish lira strengthens 1.16% against the U.S. dollar in midafternoon trading. In the past year, the lira has lost 45% of its value against the greenback as inflation keeps its hold on Turkey. The country's central bank has adopted the unorthodox policy of cutting interest rates in the face of rising inflation.
• The nominal size of the swap agreement is AED 18B ($4.9B) and TRY 64B. That will help Turkey's central bank as it uses foreign currency reserves to help prop up the lira.
• "The agreement, which is designed to promote bilateral trade with the aim of further strengthening financial cooperation between the two countries, will stand for a period of three years, with the possibility of an extension through mutual agreement," the Central Bank of the Republic of Turkey said.
• Previously (Jan. 3), Turkish inflation jumps to 19-year high in December