Turkey’s central bank, in a fundamental shift in its reserve policy, is stocking gold and scaling back on foreign exchange after many years of keeping gold reserves at a fixed level and trying to boost foreign exchange. In the first week of April alone, the central bank’s gross foreign exchange reserves declined to $83 billion from $84.7 billion the previous week, while gold reserves stood at about $25.3 billion.
The unprecedented increase in gold reserves propelled Turkey to 10th place in terms of gold reserves in February. According to the World Gold Council, Turkey had 546.8 tons of gold that month, compared to 116 tons in September 2011. In terms of value, the country’s gold reserves increased by about $10 billion over the past year. What is driving the increase?