The Reserve Bank of India (RBI) has moved 100 tons of gold from the UK to it’s domestic vaults, according to a report by the Times of India.
The RBI holds a value of around 822.10 tons of gold, as of March, of which 408.31 tons are held locally. According to Reuters, this comes after central banks have been increasing their reserves held in gold globally as it can act as a protection against currency volatility and geopolitical risks.
The report by TOI claimed that the decision to move gold to India came because the stock was building up overseas. They cite logistical and storage reasons behind the decision.
Repatriating 100 Tons of Gold: India’s Strategic Economic Move
More than half of the RBI’s gold reserves were held overseas, primarily with the Bank of England, and by bringing such a substantial portion of this gold back to India, the RBI aims to control storage costs and enhance security. The RBI also believes that moving it’s gold holdings can ensure greater control over it’s precious metal reserves.
In 1992, India faced a severe balance of payments crisis. This meant that the difference between India’s total imports and its total exports reflected a wide margin between the imports and exports, implying that India imported more than it exported— hence the deficit in its balance of payments.
At the time, the Chandra Shekhar government was in power and it sought multiple ways to be able to address this crisis, including pledging gold reserves to secure foreign exchange and stabilise the economy. Hence, the topic of bringing this gold back home has been an emotional topic for many Indians.
This move is the first time such a thing has happened in decades, the last time India took such a significant measure of transferring precious metals was during this crisis.
With this recent relocation, the RBI has successfully demonstrated the nation’s capacity to be handling it’s gold reserves and it’s commitment to safeguarding the country’s wealth. It depicts a healing curve.
This builds renewed trust in India’s economic stability in the minds of the citizens of India. In the new landscape of the global economy and market, having a substantial portion of gold within India’s borders provides strategic advantages and financial safety.
As of March 2023, India ranks ninth among countries with official gold reserves. India’s gold holdings amount to 2,191.53 tons, placing it’s value in $131,795 millions. The top countries with the largest gold reserves globally are the United States at 8,122.46 tons, Germany with 3,352 tons and Italy and France with 68.4% and 62.9% of their foreign reserves in gold, respectively.
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