ANKARA (Bloomberg) - Commercial lenders in Turkey have pulled as much as $4.5 billion worth of gold reserves since mid-June in an effort to avert a liquidity crisis as the lira plunged.
Weekly holdings reported by the Central Bank of Turkey fell by almost a fifth since June 15 to 15.5 million ounces with the lion’s share -- $3.3 billion -- of the exodus sparked by the monetary authority’s Aug. 13 move to lower reserve requirements.
"The commercial banks were probably switching to more liquid assets, given what has happened to the lira,” Jason Tuvey, a senior emerging markets economist at Capital Economics in London said by phone on Friday. "There’s been concern at the commercial banks over their external debt burden, which has been reflected in the rising bank bond yields.”
Turkish lenders are allowed to meet reserve requirements with bullion deposits, unlike in most other countries.
Turkey is one of the 20 largest sovereign owners of the precious metal and boasts the fifth-biggest consumer demand in the world, according to 2017 data from the World Gold Council. It refines scrap gold into jewelry sold all over the Middle East.