Reuters/Istanbul

Turkey exported almost $120mn worth of gold to Iran in February, data showed, suggesting the two countries’ trade of gold for natural gas has resumed despite tighter US sanctions, though at levels below last year’s peaks.
US officials have sought to prevent Turkish gold exports from providing a financial lifeline to Tehran, which has been largely frozen out of the global banking system by Western sanctions over its nuclear programme.
Turkey sold no gold to Iran in January, according to data from the Turkish Statistics Institute (TUIK), as banks and dealers eyed the February 6 implementation of US sanctions that tightened control over precious metal sales.
The US has given Turkey a six-month waiver exempting it from sanctions on trade with Iran, which is due to expire in July, but banks and dealers still have been cautious.
Turkey sold $117.9mn worth of gold to Iran last month, while exports to the United Arab Emirates, which has served in the past as a transit route to Tehran, rose to $402.3mn from $371mn in January, TUIK data showed.
“Due to the sanctions, nobody wants to attract attention. That may be the reason why exports stopped to Iran in January,” said one Istanbul gold trader, asking not to be named.
“However, trade with Iran continues; there will always be transfers. Looking at this year’s figures, the February exports to Iran are quite low, so it shouldn’t cause issues.”
Turkey’s monthly gold sales to Iran peaked last July at $1.8bn, more than 10 times the amount exported to Tehran last month.
Turkey, Iran’s biggest natural gas customer, has been paying Iran for energy imports with Turkish lira, because sanctions prevent it from paying in dollars or euros.
Iranians then use those lira, held in Halkbank accounts, to buy gold in Turkey, and couriers carry bullion worth millions of dollars in hand luggage to Dubai, where it can be sold for foreign currency or shipped to Iran.
Turkey is heavily dependent on imported energy and, while it has cut back on oil purchases from Iran, has made clear it cannot simply stop buying Iranian oil and gas.
Iran is refining uranium to a fissile concentration that Western experts say is a relatively short technical step from the level that would be suitable for atomic bombs. Tehran says its enrichment programme is solely for civilian energy purposes.
Turkey’s total gold exports rose 18% to $551.6mn in February from $466mn in January.
Turkey, which is not a major gold producer, was a net importer of gold, jewellery and precious metals in 2011 but swung to being a net exporter last year.
Its gold exports to Iran rose to $6.5bn in 2012, more than 10 times the level of 2011, while its exports to the United Arab Emirates — much of it for onward shipment to Iran or conversion to hard currency — rose to $4.6bn from $280mn.
Meanwhile, the Turkish lira was slightly stronger and bond yields inched down in thin volumes yesterday after trade deficit figures came in lower than expected, easing pressure on the central bank.
The trade deficit rose to $6.96bn in February from $6.04bn a year earlier, below a forecast deficit of $8.65bn in a Reuters poll. The lira firmed to 1.8096 to the dollar by 1427 GMT from 1.8105 on Thursday. Against its euro-dollar basket, it firmed to 2.0643 from Thursday’s 2.0670.
The benchmark two-year bond yield rose to 6.36% from 6.34% on Thursday.
“The narrower-than-expected monthly deficit, in itself, could ease the central bank’s concerns regarding the external deficit, leading to reduced tightening pressures,” said Inan Demir chief economist at Finansbank.
The central bank signalled a move away from its focus on protecting the economy against hot money this week, hunkering down instead for the threat of falling capital inflows if the crisis in Cyprus triggers global risk aversion.
The bank cut its overnight lending rate by 100 basis points on Tuesday but more than halved the amount of liquidity it provides at its monthly repo auctions, meaning more lira funding will instead be channelled through its one-week auctions and overnight lending facility.
 This gives it a tighter grip on liquidity conditions, allowing it to control the amount and cost of banks’ lira funding more quickly, meaning it can react faster either if the global environment deteriorates sharply or if risk appetite picks up again.
 In a sign of the tighter liquidity, primary dealers borrowed 6.25bn lira ($3.45bn) from the central bank’s overnight repo facility at a rate of 7% yesterday, the first time it has been used since last August.
Istanbul’s main share index rose 0.81% to 85,735 points, outperforming a 0.2% rise in the global emerging markets index.