ISTANBUL: Turkish gold sales to Iran in March soared over 30 times and gold companies said Iranians were turning to gold for savings and possibly trade as Western sanctions tighten.
Sanctions to force Iran to curb its nuclear program have targeted its energy and banking sectors and new measures from both the United States and European Union take effect in July, aimed at strangling Tehran’s foreign earnings.
The sanctions have made neighboring Turkey an ever more important channel for the Islamic Republic.
Data from Turkey’s Statistics Institute Thursday showed gold exports to Iran rose to 9 tons, worth $480 million, in March, from 286 kilograms a year earlier and compared to just 30 kg in February this year.
They were the highest monthly exports to Iran since records started in 2010. Total gold exports were 11.1 tons in March.
“It wouldn’t be wrong to say Iran chooses Turkey for gold imports because of embargoes,” said Gokhan Aksu, vice chairman of Istanbul Gold Refinery, one of Turkey’s biggest gold firms. “Iranians prefer jewels and precious stones to protect the value of their money and escape instability.”
Turkey’s trade with Iran is politically sensitive and one gold company official, speaking on condition of anonymity, said gold could also be in use for trade as sanctions made regular currency transactions harder.
“Some payments may be made in gold because of problems in transferring money to Iran,” he said. “For the most part, I think gold may be replacing money transfers in trade with Iran.”
Turkey has become an increasingly important gold producer over the last 12 years, producing 25 tons last year. It imported about 80 tons last year, but most was for re-export to unstable neighbors which also include Syria and Iraq, one gold company executive said.
Iran’s annual gold consumption was put at 300 tons by the head of its gold and jewelry association, according to a report from state news agency IRNA in February, but the lack of official data makes it hard to gauge.
Dubai is also an important center for Iranian gold buyers.
Uncertainty in Iran has taken its toll on the riyal currency, which fell as low as 19,000 to the dollar in late March from 12,000 in mid-2011 before recovering to 16,000 after Iran re-entered talks with world powers.
“It’s natural that savings are made in gold in Iran,” said Ozgur Altug, chief economist at BGC Partners in Istanbul.
The U.S. Senate was due to consider a new package of sanctions Thursday. In another indication of the impact of sanctions, petrochemical exports have plunged 90 percent in the last two weeks.