ANKARA (REUTERS) - Qatar's US$15 billion (S$21 billion) investment in Turkey will be channelled into Turkish financial markets and banks, a government source told Reuters on Wednesday (Aug 15).

The investment package was announced after Qatar's Emir Tamim bin Hamad Al Thani met President Tayyip Erdogan in Ankara, as Turkey grapples with a collapse in the lira and tensions with Nato ally the United States.

The currency has lost nearly 40 per cent against the dollar this year, driven by worries over Erdogan's growing influence on the economy and his repeated calls for lower interest rates despite high inflation.

Following the announcement, the lira firmed briefly to 5.8699 from 6.04 to the dollar, but later eased back to 6.0200 at 1538 GMT. The Turkish lira had rebounded some 6 per cent on Wednesday after the central bank squeezed lira liquidity in the market, effectively pushing up rates and supporting the currency.

Turkey and Qatar have traditionally maintained good ties and Ankara stood by Doha after Saudi Arabia and other Arab states severed diplomatic, trade and travel ties with Qatar last year, accusing it of financing terrorism, a charge Doha denies.

Erdogan's spokesman praised Qatari-Turkish relations on Twitter. "The fundamentals of the Turkish economy are robust and Turkey will emerge stronger from this process," Ibrahim Kalin wrote.