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Amidst currency crisis Turkey sells gold

The World Gold Council stated that the central banks were the net buyers of the precious metal

Recent data shows that Turkey has sold about 11.7 million tonnes of gold in the month of February. This happened amidst the currency crisis the country is facing. The World Gold Council stated that the central banks were the net buyers of the precious metal in February.

Krishnan Gopaul, market intelligence manager of World Gold Council addressed the media and stated that “Central banks tipped back into net purchases during February. Buying from India, Uzbekistan, Kazakhstan and Colombia outweighed the only notable sale of gold by Turkey.” He also added that their expectations remain that central banks will be net purchasers in 2021 However the immediate outlook for central bank demand remains finely balanced.

As the inflation in the country is about to near two-year highs, the Turkish lira was on the retreat again. The recent data thus showed annual inflation in March rose above 16 percent. This was way off the five percent target planned by the central banks. It is also to note that President Tayyip Erdogan has so far fired four bank chiefs in a period of fewer than two years which has now hurt the confidence of potential and existing investors.

When the hawkish central bank governor sparked fears of reversal of the rate hikes during mid-March, Tayyip Erdogan took the action of firing him and the Turkish lira briefly fell 15 percent to near its all-time low. It further shook the economy of 82 million people and had a ripple effect on other emerging markets that were exposed to the lira. Even the Japanese markets were down as the currency move hit long-lira traders in Japan.

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