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Turkey's gold imports from Switzerland hit the highest level on record in January

Kitco News

(Kitco News) Turkey's appetite for gold is not waning, as Switzerland shipped the most gold on record to the country, according to Swiss customs data.

Turkey imported 58.3 tonnes of gold from Switzerland worth $3.6 billion in January — the largest amount in any month on record going back to 2012. The latest data showed that the Swiss monthly gold exports to Turkey were never higher than 34 tonnes before January.

The spike in gold demand continues last year's trend and demonstrates Turkey's growing appetite for the precious metal amid high inflation, currency devaluation, and economic instability.

Switzerland exported 188 tonnes of gold last year. For comparison, in 2021, Switzerland exported only 11 tonnes of gold to Turkey.

Turkey also saw its current-account deficit widen to $48.8 billion in 2022 — the highest level since mid-2018. Gold imports accounted for $20.4 billion in 2022, which weighed heavily on the deficit.

In January, Turkey imported $5.1 billion worth of gold overall, according to the country's trade minister Mehmet Mus.

Following the devastating earthquakes that struck the country this month, Turkey took steps to curb rising gold imports, which it sees as weighing on finances. It suspended some gold imports and called on local lenders to set a minimum spread on gold for domestic sales.

The minimum spread referred to here is the difference between the asking price and the bidding prices. And the Turkish central bank asked lenders to set it at a minimum of 3%, Bloomberg cited people familiar with the matter.

But it is not only high retail demand driving Turkey's interest in gold. The country's central bank was the most prominent official buyer of gold in 2022, buying 148 tonnes, according to the World Gold Council data.

Turkey dealt with challenging economic conditions in 2022 as inflation accelerated to 85% before slowing to 64% in December. Turkey's central bank was also one of the few that cut rates in 2022, taking the key interest rate from 14% to 9%.

Turkey faced challenging economic conditions throughout 2022 as inflation accelerated to 85% before slowing to 64% in December. As a result, the Central Bank of the Republic of Turkey was one of the few that cut rates last year, taking the key interest rate from 14% to 9%. It’s likely that the recent devastation caused by a series of earthquakes in the region will only serve to deepen economic turmoil in the country.

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