According to February 2024’s latest inflation data, Turkey faces an inflation rate exceeding 67%, amid ongoing currency devaluation and a declining lira against the U.S. dollar. Recent findings suggest that in an effort to safeguard their wealth, Turks are increasingly turning to gold, with smuggling hitting unprecedented levels. Additionally, there is a growing interest among Turkish citizens in securing their assets through crypto assets, particularly those stablecoins tied to the greenback.

Record Gold Smuggling in Turkey Reflects Deepening Currency Crisis; Lira Tightens Bonds With Stablecoin Assets

This week unveiled a report highlighting that gold smuggling in Turkey has hit new highs, with authorities confiscating 350 kilograms of gold this year. Due to quotas set by the Turkish government on gold imports, there’s a soaring demand for this valuable metal as the nation’s currency, the lira, continues its steep decline.

This heightened quest for gold and secure assets, aimed at preserving the diminishing wealth of Turks, has catapulted gold prices to a 7% premium over the global weighted average, according to the report.

Amidst a substantial economic shortfall, Turkey grapples with escalating import expenses, leading to inflated prices for commodities and services. Furthermore, an exceptionally lax monetary strategy coupled with alleged interest rate suppression has further diminished the value of the Turkish lira.

“These days there are almost no [gold] sellers,” Mehmet Ali Yildirimturk, the vice-president of Istanbul Jewelers, Goldsmiths and Moneychangers Association remarked in the report published Thursday.

The Jewelry executive added:

When there’s lots of these small-scale buyers it creates demand and the price explodes.

In a trend mirroring bitcoin (BTC), gold prices have approached their peak levels earlier this month. As of March 24, 2024, the going rate for an ounce of gold hovers around $2,165. In search of financial stability, Turkish citizens are increasingly turning to cryptocurrencies, especially stablecoins.

According to cryptocompare.com, the Turkish lira ranks as tether’s (USDT) second-most traded pair. Additionally, the lira contributes significantly to FDUSD transactions and is the seventh most common pair with Makerdao’s DAI stablecoin. The lira also plays a major role in trading for tether’s gold token XAUT, where it stands as the second-most traded pair, and for PAXG, where it ranks as the third.

Source : Bitcoin News by Jamie Redman / Mar 24, 2024