The Central Bank started to sell its gold in the safe.
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Economist Uğur Gürses stated that as the available liquid foreign currency reserves melted, the Central Bank started both gold sales and transferring the foreign currency effectives in their safes to foreign currency accounts since the beginning of March.
Economist Uğur Gürses, published in his blog yesterday, ‘Silver at home and some accounting maneuvers’ In his article entitled, the Central Bank’s gold He said he started selling.
Summing up the moves of the Central Bank in recent months, Gürses stated that every borrowed cash currency was melted, the gross reserves were shown inflated with swaps, and the exchange rate could not be kept despite the fact that most of the foreign currency in the system flowed to the Central Bank.
Gürses stated that the Central Bank has lost 4 billion dollars of reserves in the last 2 weeks and said that this includes the inflow of 2.5 billion dollars brought by the Treasury through foreign borrowing.
LIQUID EXCHANGES ARE DELIVERED
Gürses stated that the Center started selling gold due to the loss of reserves and conveyed the developments since the beginning of March as follows:
“First, because they are constantly selling liquid currency, they need liquid currency every new day. As the available liquid foreign currency reserves melted, the Central Bank both started selling gold since the beginning of March and started to transfer the foreign currency effectives in its vaults to foreign currency accounts.
The Central Bank sold 2.8 billion dollars (43 tons) of gold from the week of March 3 until the week of April 14.
Again, as of the week of March 3, 2.7 billion dollars of foreign currency effectives in their safes were converted into foreign currency. In other words, he transferred it to foreign currency accounts in correspondent banks.
In total, he converted exactly $5.5 billion of assets into liquid currency.”
Graphic: Uğur Gürses
LIQUID CURRENCY FLOODED
Gürses also stated that the Central Bank needs liquid foreign currency that can be used at any time, and that gold is not immediately convertible to liquid, and explained that gold has begun to be sold due to the melting of liquid currencies and falling to a critical level.
Gürses also stated in his article that during the weekly valuation of the Central Bank’s gold reserves, it is tried to show the foreign currency equivalent of gold reserves as high based on the day or session the gold price is higher.
‘GOLD VALUE PRINCIPLE’
Gurses said:
“The second point that draws attention in the Central Bank’s balance sheet is that since the same week, it has changed the gold valuation principles and attempted to show the foreign currency equivalent of the gold reserves high on the basis of whichever day or session the gold price is high.
In the practice that has been followed for years -until the week of March 3, 2022-, the Central Bank is valuing its gold reserves on a weekly basis, dollar Calculation of the currency value was based on the morning session (AM fixing) value of the day before the last business day of the week (Thursday) in the London market. This rule was applied to the letter.
In the week of March 3 and the following weeks, we witness the following; Instead of the morning session of the day before the last working day of the week, the values of the last working day are started to be taken.
Since the balance sheet shows the situation on Friday, then it can be considered normal to take the London gold value on Friday. However, Central Bank managers preferred to take the morning session values (AM) if the morning session is high and the afternoon session values (PM) if the afternoon session is high. There is no fixed system as before, it is based on the ‘tumble principle’.
So what happened? By taking the higher value of the morning or afternoon session of Friday instead of the Thursday morning session as in the past; The Central Bank’s gold reserves were shown to be 248 million dollars higher in the week of March 3, 784 million dollars in the week of March 10, and 765 million dollars in the week of March 17. The week of April 13 comes out to 145 million dollars”
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