{"id":37818,"date":"2018-09-15T10:43:07","date_gmt":"2018-09-15T15:43:07","guid":{"rendered":"http:\/\/olduvai.ca\/?p=37818"},"modified":"2018-09-15T10:43:07","modified_gmt":"2018-09-15T15:43:07","slug":"turkish-banks-liquidate-gold-in-currency-crisis-panic","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=37818","title":{"rendered":"Turkish Banks Liquidate Gold In Currency Crisis Panic"},"content":{"rendered":"
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Turkish Banks Liquidate Gold In Currency Crisis Panic<\/a><\/span>\u00a0<\/span><\/h3>\n<\/div>\n
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At the peak of the Turkish currency crisis in mid-August, in addition to general concerns about the state of the local economy, one sector got hit especially hard: Turkish banks, which saw their bonds plunge amid growing concerns <\/a>that the currency slump would makes it impossible for lenders to repay dollar-denominated debts or rollover maturities.<\/p>\n

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The prompt liquidation was driven by were fears that Turkish lenders would struggle to find the capital to repay the $34.4 billion of bonds sold during a decade of rapid economic growth and historically low global borrowing costs. The near-term along is daunting as Turkish banks have to service $7.6 billion in USD-denominated debt by the end of 2019.<\/strong><\/p>\n

So in a panic scramble to shore up liquidity and reassure investors of their viability, Turkish banks pulled as much as $4.5 billion worth of gold reserves, <\/strong>which they then sold in exchange for “more liquid” assets.<\/p>\n

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Zooming on just the recent action shows that weekly holdings reported by the Central Bank of Turkey fell by a whopping 20% since June 15 to 15.5 million ounces according to Bloomberg<\/a>, with the bulk of the exodus, or $3.3 billion, sparked by the central bank’s decision last month to lower reserve requirements.<\/p>\n

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As a reminder, in order to stem the plunge in the lira, on August 13 the Turkish central bank cut reserve requirements for banks by 4% points for foreign exchange liabilities over one, two and three years, and by 2.5% points over other maturities. This, the central bank said, equated to $3 billion worth of dollar-equivalent gold liquidity<\/a>.<\/p>\n

But why would banks proceed to liquidate their gold holdings <\/strong>as reserves were released?<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Turkish Banks Liquidate Gold In Currency Crisis Panic\u00a0 At the peak of the Turkish currency crisis in mid-August, in addition to general concerns about the state of the local economy, one sector got hit especially hard: Turkish banks, which saw their bonds plunge amid growing concerns that the currency slump would makes it impossible for […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[63,1976,374,818,8280,4318],"class_list":["post-37818","post","type-post","status-publish","format-standard","hentry","category-economics","tag-banks","tag-currency-crisis","tag-gold","tag-turkey","tag-turkish-lira","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37818","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=37818"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37818\/revisions"}],"predecessor-version":[{"id":37819,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37818\/revisions\/37819"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=37818"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=37818"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=37818"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}