India Considers Expanding Gold Reserves

India's central bank is considering expanding its gold holdings to 10% of its reserves. That Reports the Indian television channel ET NOW based on a central bank board member. He is said to have said that the central bank is considering buying more gold. In recent years, the Indian central bank has bought gold for the first time since 2009. For example, the gold reserve has risen from 560 to 657.7 tonnes since the beginning of 2018. This means that the precious metal represents 7.5% of total reserves.

If India wants to increase its gold reserves to 10% of its total reserves, it will have to buy more than 200 tonnes of gold. This is based on the current currency reserves and the current gold exchange rate. The last time India added so much gold to its reserves was in November 2009, when the country took over 200 tonnes from the IMF. Almost a decade later, India became active in the gold market again, when its gold reserves had fallen below 6%.

India expands reserves

The Indian central bank has significantly increased its reserves in recent years. In June, the total reserve was released for the first time above $500 billion, thanks in part to the low oil price and declining demand for gold jewellery. For both commodities, the country is dependent on imports, which it has to pay for mainly in dollars. This year, India's import bill has been much lower, which has caused the central bank to build up more foreign exchange reserves. The central bank would now like to use those reserves to add extra gold to its official reserve.

The rumour of the planned gold purchases has not yet been confirmed, but it is to be expected. Since 2018, the Indian central bank has been actively buying gold again. In the first half of this year, the central bank already bought 26.4 tonnes of gold, which puts it in third place among countries that buy the most precious metal. Russia is in second place with a total of 28.7 tonnes, while Turkey is in the lead with 164.4 tonnes of gold purchases.

Also Read: 'India's central bank will buy more gold this year'

India considering buying more gold?

This contribution was made from Geotrendlines