KARACHI:
The State Bank of Pakistan (SBP) and the Central Bank of Turkey on Tuesday reached a $1 billion currency swap arrangement in Istanbul during a visit of President Asif Ali Zardari.
SBP Governor Yaseen Anwar and Turkish Central Bank Governor Erdem Basci inked the agreement in presence of President Zardari and his Turkish counterpart Abdullah Gul, says an SBP announcement.
The currency swap arrangement has been concluded in Pakistani rupees and Turkish lira with a size amounting to $1 billion in equivalent of local currencies.
The core objective of the arrangement, which will be for three years, is to finance bilateral trade in local currencies of the two countries.
The central bank said this was a landmark transaction between the two central banks and was the first time they had executed such an arrangement.
Published in The Express Tribune, November 2nd, 2011.
COMMENTS (6)
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Thanks @S and @ Muhammad Ashraf Ali
It means Pakistan and Turkey will buy and sell goods to each other without using a hard currency like US Dollar for the equivalent of a sum of usd one billion. It will be like barter trade with Turkey and such regional trade will be beneficial for both Turkey and Pakistan without putting pressure on the two countries foreign exchange reserves..
@Syme
As far as I understand it will reduce the exchange rate risk. As our currencies depends a lot of US dollars. For example rupee going lower against USD will not increase our payments to Turkey etc.
But there can be more impact good or adverse, not sure about those.
Please educate about the impact? I am uncertain about the impact, whether it will reduce the pressure over the foreign currency reserves of both countries?
for some reason..all i can think of is "10%"
That is a huge amount of coutribution, considering Turkeys Lira costs 48 Pakistani rupees.