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ISTANBUL: Turkey and the United Arab Emirates said on Wednesday they had agreed a nearly $5-billion swap deal in local currencies, in a sign of warming diplomatic ties that provides Ankara financial support as it faces economic turmoil.

The deal between the countries' central banks comes after the regional rivals sought to repair relations that were badly strained in the wake of the 2011 Arab Spring uprisings.

Turkey could tap the foreign currency to bolster its reserves, which on a net basis are at a two-decade low, after the central bank began costly market interventions last month to stem a currency crisis.

The lira, which tumbled 44% to the dollar last year, was 0.5% weaker at 13.6 at 0845 GMT.

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The banks said the accord will last for three years with the possibility of extension. Its nominal size is 64 billion lira and 18 billion dirham.

"This agreement demonstrates the two central banks' commitment to deepen bilateral trade in local currencies in order to advance economic and financial relations between our countries," Turkish Central Bank Governor Sahap Kavcioglu said in the statement.

Last month Reuters reported, citing officials, that talks between the Turkish central bank and its UAE and Azeri counterparts were wrapping up with at least one deal likely soon.

The accord follows a visit by Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahyan to Turkey in November, a meeting in which Kavcioglu held preliminary talks with UAE officials on a swap deal.

Turkey's central bank has swap deals with China, Qatar and South Korea worth about $23 billion.

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Turkey's foreign reserves have been thin since a series of currency market interventions in 2019-2020 in which some $128 billion was sold via state banks, backed by the central bank. Ankara at the time sought swap deals with the United States, Britain, Russia and Malaysia, Reuters reported.

The central bank's net international reserves fell to $7.95 billion on Jan. 7 - their lowest level since 2002 - from $8.34 billion a week earlier.

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