Turkey's gold imports plummet by 93 percent in February
Turkey imported only 1.27 tons of gold in February, a 79 percent drop compared with the same month of last year and an 93 percent plunge from January’s 6 tons, according to the data from Borsa Istanbul. REUTERS photoA drop in Iran-sourced demand and a rise in gold prices caused Turkey to slash its gold imports by 93 percent last month compared to February of the previous year.
The amount of imported gold was 1.27 tons in February, marking a fall of 93 percent from the same month last year and 79 percent from January, according to Borsa Istanbul data.
Turkey had imported six tons of gold in January and 17.34 tons in February 2013.
Turkey’s gold imports last year skyrocketed by 150 percent to reach a record level of 302.3 tons totaling $16 billion, as Ankara continued paying for Iranian natural gas and oil imports using the Turkish Lira and as Tehran used deposits held in Turkey’s state-run Halkbank to buy gold.
Some of the gold was held inside Turkey at the peak of the trade while some was taken to Dubai by couriers to be sold for foreign currency, which was urgently needed by Iran as sanctions against its atomic program have increasingly cut off access.
“The drop in gold exports to Iran and currency changes affected imports as well. When gold was exported to Iran, high demand had made gold prices in Turkey higher than global prices. As the demand abated, the gold prices declined below global levels, slowing down the imports,” Troy Precious Metals Chairman Cumhur Taşdelen said.
He said the simultaneous weakening of the lira and the upsurge in global gold prices further increased gold’s price in liras. And when it was combined with the restrictions introduced on the installment payments in buying gold, the domestic demand also declined, pushing the import demand to even lower levels, he said.
Investors sold off emerging market assets in the expectation that the U.S. Federal Reserve would continue to gradually to reduce its stimulus program.
The lira was among the biggest losers, particularly vulnerable because of Turkey’s large current account deficit and political uncertainty surrounding a corruption scandal. For the past 10 days, gold prices have been facing a steeper jump as demand for safe assets boosted on easing fears of imminent military action by Russia in Ukraine.
Ukraine impact on gold
The global gold price hit its highest since Oct. 30 at $1,354.80 on March 3 after news of escalating tensions in Ukraine hurt stock markets.
Taşdelen said the capital outflowing from emerging markets after the U.S. Fed’s decision to trim its asset purchase program and rising interest rates will put pressure on gold to decline in the upcoming period.
Turkey’s gold-for-gas trade with Iran was also the subject of the graft probe that is still shaking the ountry’s political scene.
Iranian-born Azeri businessman Reza Zarrab has been charged with forming a ring that bribed officials, including former ministers, to help disguise illegal gold sales to Iran via Turkey’s state-owned Halkbank.