Source: The Financial Times Ltd 2012
The United Arab Emirates has confirmed its place as Turkey’s leading export market, with precious metals driving sales thanks to Iranian demand for gold.
The UAE is a traditional entrepôt for Tehran, where demand for the metal has soared this year as Iran has scrambled to hedge against a falling currency, rising inflation and international sanctions against Iranian banks.
Trade figures for September which were released on Wednesday showed that “precious stones and metals” – principally gold – were by far Turkey’s biggest export for the month, at $1.6bn of sales, well ahead of vehicle sales at $1.15bn.
For the second consecutive month, the UAE accounted for the highest amount of export sales, with $1.4bn, ahead of Germany with $1.1bn. The UAE’s tally represented a 450 per cent increase compared with the same month a year ago, and was fuelled by $1.14bn in gold sales.
Even though Ankara is not a significant gold producer in its own right, this year the country has shifted from being a net importer of the metal to being a net exporter. Many Turks have a tradition of keeping savings in gold and Erdem Basci, the governor of Turkey’s central bank, recently put the country’s total stock at $115bn.
After several months this year in which Iranian gold purchases from Turkey topped $1.4bn, attracting scrutiny from the US and elsewhere, Iranian buyers appeared to begin using the UAE as a conduit in August, when the Emirates suddenly catapulted to the top of the list of countries buying Turkish goods and services.
Washington has been keen to deepen the international isolation of Iran because of the dispute over Tehran’s nuclear programme, and has also been unhappy about large scale Iranian oil sales to Turkey, which dipped markedly in September, according to data released on Wednesday.
The Turkish government stressed that the country’s $13bn of exports for the month helped narrow its foreign trade deficit from $10.4bn in September 2011, to $6.8bn.
But Gulay Elif Girgin, at Oyak Securities in Istanbul, said that gold accounted for three-quarters of the increase in exports for the first nine months of the year – and that without the metal, exports were up just 4 per cent compared with the same period in 2011, rather than 14 per cent. She added that for the first nine months of the year, Turkey’s net exports of gold were $5.5bn, out of total exports of the metal of more than $10bn.
“This gold is being used to pay our energy bill with Iran, so it is not in fact a real export, but it has been very important in reducing Turkey’s trade deficit,” she added.