Turkey is paying with its gold reserves to preserve short-term stability for the lira.
📉 The Central Bank of Turkey cut nearly 50 tonnes of gold in just one week, bringing total holdings down to 772 tonnes and marking the sharpest weekly decline in seven years. The move shows that pressure to defend the domestic market has risen significantly.
🏦 The drop came from both outright gold sales and gold swaps for lira and foreign currency, while policymakers have also used a large amount of FX reserves since the Iran conflict began. This suggests the current stabilization effort is relying not only on interest rates, but also on direct use of reserve assets.
⚠️ Even though gross FX reserves increased, total reserves still fell because of both the sharp decline in global gold prices and the reduction in physical gold holdings. The short-term effect may be lower market volatility, but the trade-off is that Turkey’s reserve buffer is thinning much faster.