The Central Bank of Iraq has bought 36 tonnes of gold this month, it said in a statement on Tuesday, in a bid to help stabilise the exchange rate of the Iraqi dinar against other currencies.
The purchase marks the first addition to Iraq’s gold reserves since it lifted its holdings by 23.9 tonnes in August 2012, according to data from the International Monetary Fund.
Added to the 29.8 tonnes the World Gold Council says it already held, the purchase brings Iraq’s total gold holdings to 65.8 tonnes, making it the 43rd largest official sector bullion holder in the world, after Denmark and just ahead of Pakistan.
At current market prices the purchase was worth $1.5 billion.
Central banks had been net sellers of gold until the financial crisis that followed the collapse of Lehman Brothers, which boosted bullion’s appeal as a reserve asset and hedge against currency market volatility.
That prompted central banks which held a low proportion of bullion in their forex reserves — chiefly in Asia and the emerging markets — to buy gold, helping fuel a surge in prices to a record $1,920.30 an ounce in September 2011.
However, the strength of their demand has since waned. Central bank gold buying fell to its lowest in three years in 2013, down by nearly a third to 368.6 tonnes.