Turkey’s reserves surge on gold rally

The Turkish central bank has been a notable beneficiary of the rally in gold prices. Not only has this sharply increased financial reserves; it's arguably bolstered the central bank's position as it tentatively cuts rates following the hawkish policy of recent years.

Our first chart shows how both gross and net international reserves have risen steadily since Türkiye's return to more orthodox economic policies in early 2024. As of January 23, gross international reserves reached a record USD 215.6 billion; net reserves climbed to an all‑time high of USD 97.1 billion. (Reserves excluding the aggregate FX forward and futures position also stand at a historic peak of USD 86.2 billion.)

To be sure, still-high interest rates and a broadly supportive backdrop for emerging-market capital flows also bolstered reserves. But to illustrate the outsized effect of gold, we've added two more visualizations of the central bank's holdings.

According to CEIC calculations, breaking down the effects of gold prices and central bank accumulation shows that the bullion rally has added about USD 49 billion to the central bank's reserves since April 2025. (That's when Donald Trump's "Liberation Day" tariffs shook global markets, exacerbating concerns about dollar debasement and renewing safe-haven demand.)

Gold reserves have also not only risen in nominal terms but in real terms too, as shown in our third chart, and remain close to historically high levels.

Turning to monetary policy, the CBRT last week extended its easing cycle, albeit with a smaller rate cut than some observers expected; the central bank has moved cautiously, with inflation still proving sticky at around 30%.

Even so, ex‑post real interest rates of roughly 7% have been sufficient to attract international investors back into Turkish assets. We can see this in our final chart, which taps international fund-flow data from EPFR.

Since the start of the year there has been a foreign net inflow of about USD 6.2 billion into Turkish equities and USD 3.6 billion into domestic government bonds. These flows have lifted total foreign holdings to a new record of roughly USD 61.4 billion -- despite Türkiye's relatively modest and little-changed weight in global emerging-market benchmarks. (The country accounts for 3.6% of EM bond indices and 0.6% of EM equity indices, EPFR data shows.)

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