What do you do when your two biggest trading partners are embroiled in economic standoffs with the U.S.? You buy as much gold as you possibly can.
At least that's what Kyrgyzstan's central bank is doing in a bid to protect itself from currency volatility in China and Russia. The central Asian nation hopes to grow the share of gold in its $2 billion international reserves to 50 percent from around 16 percent now.
"The rules of the game are changing," Kyrgyz central bank Governor Tolkunbek Abdygulov, 42, said in an interview in the capital, Bishkek. "It doesn't matter what currencies we have in our reserves; dollars, yuan or rubles all make us vulnerable."
The policy has put Kyrgyzstan's gold holdings as a percentage of total reserves close to the level held by Russia, and above emerging-market economies such as India and Turkey, according to data from the World Gold Council. The U.S. and Germany have more than 70 percent of their reserves in gold.
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Kyrgyzstan is well placed to build up stockpiles, because the precious metal is its biggest export. Since 2014 the central bank has had a policy of buying up about as much of the country's gold as possible, Abdygulov said. Kyrgyzstan's biggest mine is operated by Canada's Centerra Gold with production sold outside of the country. Total industrial output was $3.4 billion in 2017, according to central bank data.
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Abdygulov is aiming to switch to inflation targeting by the end of his seven-year term in 2024. Until then the best he can do is to grow, or at least preserve, the nation's international reserves.
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(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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