The Reserve Bank of India (RBI) also made purchases in Dhanteras. A new consignment of 102 tonnes of gold has been imported from the UK to India. 102 tons of gold have been transferred from the Bank of England to the Reserve Bank of India. Previously, the Reserve Bank of India imported 100 tons of gold from the United Kingdom in May. As of the end of September, the Reserve Bank of India had a total of 855 tons of gold, of which 510.5 tons are currently stored in India.
The move to request gold from the Reserve Bank of India signals a change in strategy. The Reserve Bank of India is moving gold stored abroad to India to keep it safe as geopolitical tensions rise.
How did gold come from Britain?
Since September 2022, India has shipped back 214 tons of gold, reflecting the priority of the Reserve Bank of India and the government to move assets closer to home. Government officials say keeping these reserves at home could improve inflation and the economy’s security amid global tensions. The gold was secretly transported from Britain by plane and other means.
Order 100 tons of pledged gold in May
In early May, reports emerged that India had recalled 100 tons of gold from the UK, a large amount accumulated in the 1990s. At the time, the government had pledged gold to foreign banks as collateral during a balance of payments crisis. This way funds can come from abroad and India’s economy can improve. However, today India is in a strong position. In this case, the goal is to keep the funds safe, not to use them in emergencies.
Most of India’s gold is still in the UK
Currently, India’s 324 tons of gold reserves are overseen by the Bank of England and the Bank for International Settlements. Both banks are based in the UK. The Bank of England is best known for its secure ‘bullion warehouses’, which have stored precious metals for central banks around the world since 1697, allowing them to take advantage of the liquidity of the London bullion market.
If we look at India’s foreign exchange reserves, gold is now at 9.3%, which is more than 8.1% in March. This happens when gold prices rise. The current price in Mumbai is Rs 78,745 per 10 grams and is expected to reach Rs 85,000 per 10 grams next year.
Why is the Reserve Bank of India buying gold?
The main purpose of the central bank’s holding of gold stocks is to diversify its foreign currency asset base and hedge against inflation and foreign exchange risks. The Reserve Bank of India started collecting gold from the market on a regular basis in December 2017. The goal is to increase the proportion of gold in the country’s total foreign exchange reserves to about 8.7% by the end of April 2024 from 7.75% at the end of December 2023.
Where does the Reserve Bank of India store its gold?
Domestically, gold is kept in safes at the Reserve Bank of India buildings on Bohol Road in Mumbai and Nagpur. According to a report by the World Gold Council, global central banks hold approximately 17% of mined gold, with reserves set to exceed 36,699 metric tons (MT) by the end of 2023.
