Gold rush at Istanbul’s Grand Bazaar as Turkish lira slumps
Turks acquired up gold bullion worth $7 billion in just two weeks as the Turkish lira has plummeted alarmingly, Reuters reported.
Reuters spoke to Hasan Ayhan, 57, who was using his saved up foreign currency to buy gold at Istanbul’s Grand Bazaar.
“I think it is the best investment right now so I converted my dollars to buy gold,” he told Reuters, in an article published on Friday. “I might withdraw my lira and buy gold with it too, but I am scared to go to the bank right now because of coronavirus.”
The day after Ayhan bought his gold on Aug. 6, the lira hit a historic low and has remained weak since - with concerns that Turkey’s reserves have been badly depleted by the Turkish state’s market interventions.
Günay Güneş, who has a busy booth near the market’s entrance, told Reuters he had been “chatting with hundreds of people who are thinking about selling their cars or houses to invest in gold”.
Turks have traditionally used gold as savings and there may be as much as 5,000 tonnes of it “under mattresses”, Reuters cited Mehmet Ali Yıldırımtürk, deputy head of an Istanbul gold shops association, as saying.
The lira hovered around 7.3 versus the dollar this week, and it remains among the worst emerging-market performers this year.
Demand has eased since Turks withdrew some $2 billion in hard foreign cash from their banks during the March-May period in which a COVID-19 lockdown was imposed, according to central bank data.
If Ankara cannot boost confidence in the currency, which has fallen almost 20 percent this year, Turkey risks growing inflation and a possible balance of payments crisis that will worsen fallout from the coronavirus crisis, Reuters said.
The Turkish central bank has sold more than $110 billion since last year in an attempt to stabilise the lira. In turn, the bank’s gross foreign reserves buffer has fallen by nearly half this year to below $47 billion, its lowest in years, Reuters reported.