From Reuters, by Nevzat Devranoglu
Turkey is taking steps to give its central bank the right of first refusal on domestically produced gold, two sources said, allowing it to boost reserves of the precious metal without depleting foreign currency holdings.
Like other central banks, the Central Bank of the Republic of Turkey holds a mix of assets, including foreign currencies and gold, as official reserves. The International Monetary Fund (IMF) has recommended that Turkey bolster its foreign reserves to shield itself from external volatility.
Buying more domestically produced gold, which is priced in lira, will allow the bank to avoid depleting foreign reserves at a time when the domestic currency, has been hammered by political concerns.
“The central bank is being given first option,” to buy locally mined gold, said an official from the domestic gold sector. “This means the central bank will become a primary gold buyer in lira.”
No one was immediately available for comment at the central bank.
Under the scheme, the central bank is under no obligation to buy domestic gold, the sources said, adding it would decide on the timing and amount of its purchases.
A total of 27.5 tonnes of gold was produced in Turkey in 2015, according to the latest industry data, equal to around $1.1 billion at current prices.
“It is important to increase the central bank’s reserves. This adjustment will contribute to the central bank’s gold reserves over time,” one source said.
As of last month, the central bank’s gold reserves stood at $17.25 billion, according to official data. (Writing by Tuvan Gumrukcu; Editing by David Dolan and Stephen Powell)