Turkey sells, swaps nearly 60 tonnes of Gold worth $8 billion amid West Asia war pressures
&imwidth=600&imheight=450&format=webp&quality=medium "Turkey sells, swaps nearly 60 tonnes of Gold worth $8 billion amid West Asia war pressures")
Representational image. Photograph: (Wikimedia Commons)
Some of the gold was sold outright, however, most of them was utilised to secure foreign exchange or liras via swap agreements. Meanwhile, officials of the Turkey’s central bank has declined to give any remarks on it.
Turkey’s central bank has swapped and sold nearly 60 tons of gold, worth over $8 billion, in two weeks after the West Asia war begins. This has added to downward pressure on bullion prices as the country's gold reserves show a decline of 6 tons in the week of March 13 and another 52.4 tons in the week of March 20, according to the latest data published by the central bank.
According to a report by the Bloomberg, some of the gold was sold outright, however, most of them was utilised to secure foreign exchange or liras via swap agreements. Meanwhile, officials of the Turkey’s central bank has declined to give any remarks on it.
The move comes as Turkey’s disinflation strategy faces pressure, as it depends on keeping the lira stable or gradually weakening, often supported by foreign-currency interventions through state-run banks. However, higher energy import costs and increased demand for dollar since the war began have made this approach harder to maintain.
Central bank relied on gold sales and swap deals
To manage liquidity and support domestic demand, officials have reportedly relied on gold sales and swap deals using the central bank’s $135 billion reserves, according to Iris Cibre of Phoenix Consultancy in Istanbul. She estimated total sales at 58.4 tonnes, with more than half carried out through gold-for-foreign-exchange swaps overseas.
This figure is higher than the roughly 43 tones of outflows from gold-backed exchange-traded funds tracked by Bloomberg during the same two-week period, highlighting the scale of the intervention.
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Additionally, as per Bloomberg, the central bank of Turkey had been discussing to track its gold reserves via transactions in London to protect the lira from steeper war-related losses. The report sent the spot price of the gold on global markets swinging to a loss from an previous gain. It indicated that the spot gold declined another 2.4 per cent as of 5 p.m. in London on Thursday, paring losses from as much as 3.1 per cent previous.
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