Hungarian central bank triples gold reserves to highest level in decades
By Marton Dunai
BUDAPEST, April 7 (Reuters) - The National Bank of Hungary (NBH) said on Wednesday it had tripled the country's gold reserves to 94.5 tons, its highest level in decades, to help stabilise the economy amid the COVID-19 pandemic, inflation risks and rising debt.
Hungary now has the highest per capita gold reserves in central and eastern Europe at 0.31 ounces, the bank said in a statement on its web site.
It said it had considered "the country's long-term national and economic policy strategy objectives, (while) managing new risks arising from the coronavirus pandemic also played a key role in the decision."
"The appearance of global spikes in government debt or inflation concerns further increase the importance of gold in national strategy as a safe-haven asset and as a store of value," it said.
The NBH has aimed to increase gold reserves since 2018, when it put about 1 billion euros into monetary gold, according to the breakdown of reserves on the bank's web site. The gold stock within the reserves has stayed steady since.
At the end of February, gold reserves were worth 1.47 billion euros out of total reserves worth 33.2 billion euros, the bank said.
It did not say how much it paid for the additional gold - 63 tons - but the amount it holds has tripled, so its worth is now probably around 4.5 billion euros, or nearly 15% of the total reserves, K&H Bank analyst David Nemeth said.
The move "makes sense as a step to diversify the reserves," Nemeth said. "I can also imagine that the NBH expects international bond yields to rise, which could dent the value of the bank's bond portfolio."
Gold reserves have fluctuated wildly in recent decades, the NBH noted. During World War Two, its 30-ton reserves were shipped to Austria. They were later returned and backed up the new Hungarian currency, the forint. After communist rule ended, gold reserves were gradually depleted to 3.1 tons from 46 tons but are now back at high levels.
(Reporting by Marton Dunai; Editing by Timothy Heritage)
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