Turks are not showing any signs of reducing their appetite for gold even after President Recep Tayyip Erdoğan revamped the country’s economic team two weeks ago, Bloomberg reported.
Turkish retail investors have increased their gold holdings by $2.2 billion to $36.4 billion since, almost triple the level they were at in 2019, Bloomberg said on Friday.
Gold imports now account for most of Turkey’s current account deficit, which has ballooned this year after the government engineered a borrowing boom among consumers and businesses. The purchases of the previous metal are preventing a narrowing of the deficit as a new finance minister and central bank governor work to implement market-friendly reforms.
“We see steady demand from local investors for gold even at higher than world prices – unattractive deposit rates and the lack of trust in the lira are the main reasons driving the demand,” said Doğukan Çiçek, business development executive at Troy Precious Metals in Istanbul, according to Bloomberg.
The lira soared by more than 10 percent in the week following Erdoğan’s replacement of the central bank governor on Nov. 6 and the resignation of his son-in-law Berat Albayrak as Treasury and Finance Minister the following day. But that has not stopped Turks buying gold and foreign currency – forex deposits at banks have risen by $35 billion to $228 billion this year.
Turks added $3.94 billion to their foreign currency savings in the two weeks to Nov. 20, Bloomberg said.
The lira slid to a record low of 8.58 per dollar on Nov. 6. It has since rallied to as high as 7.5 against the U.S. currency. It traded at 7.83 per dollar on Friday, up 0.5 percent on Thursday’s close.