Turkey weighs using gold reserves to defend lira amid Iran war turmoil: report

Wed Mar 25 2026

Turkey’s central bank is considering using part of the country’s roughly $135 billion in gold reserves to help defend the lira against market pressure linked to the war in Iran, Bloomberg reported on Tuesday, citing people familiar with the matter.

According to Bloomberg, the Turkish central bank has discussed conducting gold-for-foreign currency swap transactions in the London market as part of an expanded set of measures to support the Turkish currency.

The central bank declined to comment to Bloomberg on the reported discussions.

Turkey’s monetary authority had gold reserves worth about $135 billion as of early March, making it one of the world’s largest official holders of gold. Turkey has built up its gold stock over the past decade as policymakers sought to reduce the country’s exposure to US dollar-denominated assets.

Citing a Tuesday note from JPMorgan Chase & Co. economist Fatih Akçelik, Bloomberg said about $30 billion of Turkey’s gold reserves are held at the Bank of England and could be used for foreign exchange intervention without logistical delays.

The central bank is looking for additional tools as Turkey faces new risks from the Iran conflict, which has pushed oil prices above $100 a barrel from around $70 in recent weeks. Because Turkey imports nearly all of its oil and natural gas, higher energy prices could worsen inflation and strain the country’s external financing position.

Turkey has already been struggling with high inflation. Annual inflation stood at 31.5 percent in February, one of the highest rates in the world.

Turkey’s disinflation program has depended in part on keeping the lira from weakening faster than monthly inflation. That policy has become harder to maintain as the war has driven up import costs and put pressure on the central bank’s reserves.

Turkish authorities have so far responded to the market fallout by tightening liquidity, making lira funding more expensive and using state-owned lenders to intervene in the foreign exchange market.

The central bank has been selling holdings of foreign-currency bonds, including US Treasuries, with people familiar with the transactions estimating that policymakers sold about $16 billion worth of such debt in recent weeks. Turkey held less than $17 billion in US Treasuries as of the end of January, down from a peak of $82 billion in 2015, according to the Bloomberg report.

Foreign investors have also been pulling back from Turkish assets. According to central bank data published Monday, foreign investors sold Turkish government bonds at the fastest weekly pace on record in the week ending March 13.

According to the Bloomberg report, traders at İstanbul’s Grand Bazaar were selling dollars at a premium over the interbank exchange rate as local demand for hard currency rose.

Traders are now pricing in a 100 basis point interest rate increase next month. Turkey’s benchmark policy rate is currently 37 percent, but the central bank stopped funding the market at that rate at the start of March and has instead shifted to a higher-cost funding window set at 40 percent.

The lira was trading at 44.35 to the dollar on Tuesday afternoon in İstanbul, down 0.1 percent on the day, according to Bloomberg. The currency has declined by an average of about 0.05 percent per day this year.

Source: https://www.turkishminute.com/