Soaring gold outweighs fall in Turkish currency reserves

• Covers dip in foreign-exchange holdings
• Price down slightly from 2025 high
• Turkey’s total reserves at $189bn

Hikes in the price of gold have boosted Turkey’s international reserves, more than covering a dip in foreign-currency holdings to below historic averages.

Gold has gained more than 65 percent over the past 12 months and was trading around $4,570 an ounce on January 9, although prices have eased from record highs posted at the end of 2025. 

The gains are reflected in the Turkish central bank’s ledgers and ease pressure to hold expensive foreign exchange. 

The central bank said its overall reserve assets rose 2.8 percent in the week ending January 2. Total holdings were $189 billion, according to data issued on January 8. 

The reserves are used by the central bank to defend the lira and repay Turkish debt. As recently as 2023 the reserves number was in negative territory in the runup to presidential elections won by incumbent Recep Tayyip Erdoğan as the government sought to curb forex demand and intervened to support the lira. 

The pressure came at a time when interest rates were 8.5 percent but inflation was close to 40 percent, after the lira had lost 30 percent in 2022. 

The negative position started to reverse after the general election in May 2023, with the introduction of austerity measures by an economic team led by treasury and finance minister Mehmet Şimek and central bank governor Fatih Karahan. 

Between them, they orchestrated an increase in interest rates to 50 percent, and a more managed devaluation of the lira, which opened the new year trading at 43 to the dollar. 

Turkey is not alone among vulnerable regional economies in having gold ease pressure on its central bank. Lebanon and Egypt have reported substantially higher reserve numbers.

Of the Turkish holdings, $114.5 billion was in bullion, with $66.8 billion in cash. The balance was in International Monetary Fund reverse positions and special drawing rights.

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Financial analyst İris Cibre said that even if the reserve position has improved, the central bank has sold a net $23.7 billion since the beginning of the year, mostly to support the lira.

“The increase in the central bank reserves is completely due to gold prices.”

Currency reserves have dipped from just over $80 billion at the end of 2024 to $66.8 billion, one of the lowest levels in the past decade. 

Should there be a fall in global risk factors and a strengthening of the US dollar, a shift could occur back into foreign-currency assets and out of gold, Cibre said.

“What is necessary for us is that the foreigners currently entering the bond market for a short period instead turn towards securities, meaning that they would be staying in Turkey for longer,” she said, referring to the popular carry trade.