The central banks of the United Arab Emirates and Turkey signed a bilateral currency swap agreement of a nominal size of 18 billion UAE dirham ($4.90 billion) and 198 billion Turkish lira, they each said on Thursday.

The Turkish central bank said the swap deal is designed to provide local currency liquidity to financial markets and enable more efficient settlement of commercial and financial transactions.

The banks also signed two memorandums of understanding focusing on promoting the use of local currencies in cross-border transactions and linking payment and messaging systems between the countries, the Turkish side said.

($1 = 3.6728 UAE dirham)

($1 = 41.6076 liras)

(Reporting by Nayera Abdallah, Nevzat Devranoglu; Writing by Ezgi Erkoyun; Editing by Tomasz Janowski and Jonathan Spicer)