RBI's Gold Reserve Strategy

May 24, 2024

RBI's Gold Reserve Strategy

Why is the Reserve Bank of India (RBI) increasing its gold reserves?

The RBI is bolstering gold reserves to:

Diversify: Reduce reliance on the US dollar and spread risk.

Hedge: Protect against inflation and currency fluctuations.

Stability: Signal economic strength and instill investor confidence.

Latest facts:

♦ As of April 2024, RBI held approximately 827.7 tonnes of gold.

♦ This marks a significant increase from 803.6 tonnes at the end of December 2023.

♦ The share of gold in total forex reserves rose to 8.7% by April 2024.

FAQs:

Where does RBI store its gold?

Both domestically and in safe custody overseas with central banks like the Bank of England.

Is this a new trend?

No, central banks worldwide are increasing gold reserves amid global economic uncertainty.

Additional points:

♦ RBI's gold buying spree in early 2024 was influenced by geopolitical tensions and a slowing global economy.

♦ Increased gold holdings also result in valuation gains for the RBI due to rising gold prices.

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