Turkey to temporarily suspend some gold imports after quakes

Rows of gold jewelery as a backdrop in a jewelry store at the Grand Bazaar. Istanbul, Turkey. Credit: Adobe Stock

Turkey will suspend some gold imports as part of an emergency plan to mitigate the economic fallout from twin earthquakes that hit the country’s southeast last week, according to an official with direct knowledge of the matter.

The Treasury and Finance Ministry has finalized the regulation that will force a pause in gold purchases from abroad that fall into the category of “cash against goods,” the official said, asking not to be identified as the decision has not been made public.

The ministry declined to comment.

Gold imports were among the biggest drags on Turkey’s external finances in the months before the deadliest temblors to hit the country in almost a century. Turks invested in the precious metal as a hedge against rampant inflation and steep declines in the lira.

The deficit in Turkey’s current account, the broadest measure of trade and investment, widened to $48.8 billion in 2022, with gold imports accounting for $20.4 billion. The current-account gap was the widest in at least a decade.

A decision to limit some gold imports would amount to “another form of capital controls,” according to Istanbul Analytics economist Guldem Atabay.

‘Unsustainable efforts’

“Now after the quakes, the very high economic burden and higher political uncertainties are likely to spur demand for more gold,” Atabay said. “Hence come the government’s unsustainable efforts to curb gold demand, force locals to the Turkish lira and limit an expected further deterioration in the current-account deficit.”

The gold rush hasn’t slowed this year, with imports of precious metals jumping 656% to $5.4 billion in January from a year ago, according to Trade Ministry data. Gold imports reached a monthly record of 68.3 tons in January.

Turkey was also the biggest buyer of gold among central banks last year. Its gold reserves were at the highest level on record, the World Gold Council said last month, soaring by 148 tons to 542 tons.

(By Firat Kozok)

Read more: 2022 was record year for central bank gold buying, WGC confirms


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