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

Timothy Ash London-based strategist
Short Url
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.”

Nvidia deal for Arm will drive computing power growth, says SoftBank’s CEO

Updated 23 October 2020

Nvidia deal for Arm will drive computing power growth, says SoftBank’s CEO

  • Saudi Arabia's Public Investment Fund (PIF) is an anchor investor in the $100 billion Vision Fund

TOKYO/DUBAI: SoftBank Group Corp. CEO Masayoshi Son said on Thursday the sale of chip designer Arm to Nvidia Corp. will drive growth in computing power, in his first public comments since the $40 billion deal was announced in September.
Son made the comments at a virtual summit about artificial intelligence hosted by Saudi Arabia, an anchor investor in the $100 billion Vision Fund, at which he reiterated his belief that AI would transform society.
The Nvidia deal, part of a series of asset sales by Son, whose group has been shaken by soured investments and the COVID-19 pandemic, has raised concerns it will threaten Arm’s role as a neutral supplier in the industry.
Son is set to speak next week with Nvidia CEO Jensen Huang at SoftBank World, the group’s annual event for customers and suppliers that is being retooled as it focuses on investing.
SoftBank’s growing cash pile is driving speculation about future investment plans, with the Vision Fund targeting external funding for a blank-check company, a source said, in a sign the group is regaining its mojo.
“I am a risk taker,” Son said on Thursday.
Rajeev Misra, CEO of SoftBank Investment Advisers which oversees the Vision Fund, said the market share gained by online commerce companies in the last six to eight months is more than what they gained in the previous four years put together.
“COVID has accelerated the acceleration of AI even further,” Misra told the same conference, adding in the 105 companies Vision Fund 1 and 2 have invested in, artificial intelligence is the core of their businesses.