Tuncay Tursuncu, head of the investment market research company Integral, told Sputnik Turkiye that the main reason for the increase in gold purchases by Turkey may be an attempt to deal with the high US dollar exchange rate variability in Turkey as Turkish lira weakens against the US currency.
"As we know, the Central Bank made certain steps to increase the gold reserves. Banks were advised to maintain a portion of their currency reserves in gold. The main reason for this development is the high US dollar exchange rate variability in Turkey during the last two years. Turkish lira weakened against the US dollar, which resulted in the decrease of the reserves. The Central Bank, therefore, moved to ensure that the gold and foreign currency reserves would be able to overcome the lira’s volatility," he said.
He also dismissed speculations about this increase in Turkish gold reserves had to do with growing tensions between Ankara and the West.
"The biggest impact on the Turkish economy was caused by a crisis in relations with Russia that emerged after the incident with the Russian plane (the downing of a Russian Su-24 aircraft in Syrian airspace by a Turkish F-16 fighter jet). Our bilateral annual trade volume, which previously amounted to $25-30 billion, plummeted to $11 billion during that time; now however it is gradually recovering to the pre-crisis levels. The tensions in relations with the West did not have such tangible impact on the country’s economy," he explained.
This year Turkey has drastically increased the volume of gold purchases, procuring a total of 47 metric tons worth of gold coins and bullion as compared to the 14.8 metric tons last year.
Last year Turkish President Recep Tayyip Erdogan also called upon citizens and the country’s Central Bank to favor gold over US dollars.