How did Turkey export $1.2 billion worth gold to Switzerland?

ISTANBUL - Reuters

Turkey’s trade deficit in March has shrunk by 30 percent thanks to strong export performance, while rising gold exports to Switzerland standed out. REUTERS photo

A surge in gold exports to Switzerland narrowed Turkey's trade deficit more sharply than expected in March, with the gap falling by a third to $5.195 billion, data showed on Wednesday.

The deficit was narrower than the $6.05 billion forecast in a Reuters poll and down from $7.437 billion in the same month of the previous year, data from the Turkish Statistics Institute showed.

The trade gap was reined in by $1.275 billion in gold exports to Switzerland, out of a total $1.36 billion in exports to the country, making it Turkey's biggest trade destination last month.

Turkish gold exports to Switzerland in the first quarter as a whole amounted to $2 billion, up from just $102,912 a year earlier.

Turkey has in the past imported large amounts of gold to transfer to Iran. Trade with Iran boomed in 2012 when Ankara was paying for its natural gas and oil imports with Turkish lira, and Iranians were using those deposits held in Turkish bank accounts to buy gold.

But the trade tailed off last year as U.S. sanctions imposed on Tehran were tightened. One official in the gold sector said this could explain the surge in exports to Switzerland.

"Turkey imported a huge amount of gold in the past period to be transferred to Iran," the official said.

"But when this channel was closed, a portion of this stock could have been sent to Switzerland to be turned into cash in anticipation of gold prices falling."

Overall Turkish exports rose 12.4 percent to $14.748 billion in March, while imports fell 3 percent to $19.943 billion, the statistics institute data showed.