The Turkish central bank sold and swapped nearly 60 tons of gold, worth over 8 billion dollars, within just two weeks of the outbreak of the war related to Iran, in a move that increased downward pressure on global gold prices.
These operations aim to support the stability of the Turkish lira, which faces renewed pressures due to geopolitical tensions and rising energy costs.
Data from the central bank showed a sharp decline in gold reserves, which fell by 6 tons in the week ending March 13, followed by an additional loss of 52.4 tons in the following week, bringing the total decline to 58.4 tons over two weeks.
👈Sales and swaps to support the currency
According to informed sources quoted by Bloomberg, part of the gold was sold directly, while the larger portion was used in swap operations to obtain foreign currencies or Turkish lira, aimed at enhancing liquidity and supporting the foreign exchange market.
These moves occurred quickly after the outbreak of the war and contributed to increased pressure on precious metal prices, amid a large influx of gold into the markets.
👈Rising economic pressures
Turkey faces direct repercussions from the conflict, given its heavy reliance on energy imports, especially oil and gas from Iran, and with inflation reaching 31.5% in February, authorities tried to maintain the real strength of the lira to curb price hikes.