A recent report may reduce speculation that India would follow up on their recent 200 ton purchase of gold from the IMF and purchase additional reserves. Although the 200 tons of gold represents a minuscule percentage of India’s foreign reserves, the Prime Minister’s Economic Advisory Committee is recommending against additional gold purchases. See the following article from Commodity Online for more on this.
India’s central bank–the Reserve Bank of India (RBI) may wait for an appropriate time to buy more gold as it seeks to increase its gold reserves.
According to a report, the Prime Minister’s Economic Advisory Committee has recommended that the RBI should wait before making further gold purchases.
The RBI had bought 200 tonnes of the International Monetary Fund (IMF) gold in October and this had caused major upheaval in the global bullion market.
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The PM’s panel said having bought 200 tonnes of gold, the RBI might wait. There is no particular hurry to buy more. At the moment, RBI has made a substantial increase to the total quantity of gold it has.
RBI had readjusted in some way the proportion of gold in its total reserves because the quantity of gold had remained constant, while forex reserves had increased.
The 200-tonnes gold buy by RBI constituted only 2.35 per cent of its total forex reserves at $284.3 billion at that point of time and raised the gold reserves with RBI to 557 tonnes.
There is speculation that RBI may buy more gold, after purchasing 200 tonnes in the month of November. RBI officials remained tight-lipped about the purchase.
India had to pledge around 68 tonnes of gold with the Bank of England and Union Bank of Switzerland in the early 1990s to tide over a balance of payments crisis.
This article has been republished from Commodity Online. You can also view this article at Commodity Online, a commodity news site.