Turkey central bank draws down gold reserves to meet demand
Turkey’s central bank has been selling off its gold reserves to meet local demand, which has surged as citizens seek to protect themselves against inflation or currency depreciation before elections next month.
The central bank started to meet demand for the precious metal after Turkey suspended gold imports in February, according to a person with direct knowledge of the matter. The monetary authority has also begun to accept liras in transactions for gold sales, aiming to ease pressure on the local currency in the spot market, the person said.
The central bank declined to comment.
The central bank’s gold reserves have been tumbling over the past seven weeks, according to official data, which show a decline of 9% during that period.
Following twin earthquakes on Feb. 6, Turkey issued a regulation forcing a pause in gold purchases from abroad that fall into the category of “cash against goods.” At the time, gold imports were among the biggest drags on Turkey’s external finances.
Turkey was the biggest buyer of gold among central banks last year, according to World Gold Council data. The nation’s gold holdings were at a record level before the quakes.
(By Kerim Karakaya)
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2 Comments
OTOH/IMHO
Turkey’s CB sells gold to citizens hoping to find protection from currency devaluation. A modest proposal: re-institute the gold standard. Workers and housewives would be delighted to know the value of their money would stabilize, and you could issue long term bonds, like the consols the Brits used in the days they could be trusted: 100 year bonds yielding a mere 1%
OTOH/IMHOI
Of course, you could always try to fake people out with a “gold crypto” like Zimbabwe (wonder how that is going to play with the people, who share 99% of their DNA with the mouse, not one of whom is ever fooled by the picture of a piece of cheese.)