Turkey and Qatar have agreed to extend a currency swap deal between their central banks amid the Turkish lira plunging in value fuelling an economic crisis.

The two sides "welcomed the signing of the agreement on the extension and amendment of the Turkish lira-Qatari riyal currency exchange arrangement" between their central banks, according to a joint statement on Tuesday, reports Al Arabiya News.

The announcement was made at a time when Turkish President Recep Tayyip Erdogan in visiting Doha, where he met with Qatari Emir Sheikh Tamim bin Hamad Al-Thani and discussed enhancing cooperation in various fields including the economy, said the report.

An agreement signed in 2018 was extended for the first time in May 2020, with the overall limit increased from $5 billion equivalent of the Turkish lira and Qatari riyal to $15 billion.

The annual inflation rate in Turkey surged last week above 20 percent which is the highest in three years, mentioned in the report.

With a population of 84 million, Turkey has seen the lira plummet along with soaring consumer prices with the lira losing more than 45 percent of its value against the dollar since the start of the year.

The currency crisis in the country is now more acute than the one it experienced during a diplomatic standoff with then US president Donald Trump in 2018.

Turkey and Qatar, a close US ally, have become economic and political partners in recent times, the report also said.

President Erdogan notably backed Doha during a boycott of Qatar from 2017 over allegations it supported radical Islamists and was too close to arch-rival Iran – allegations which Doha denied, the report concluded.