The decision reflects a strategic shift in the central bank’s gold reserve management, amid global geopolitical tensions and evolving preferences among central banks.
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According to RBI data, the central bank’s gold holdings have been steadily increasing over the years, reaching 822.1 tonne as of March 2024.
The movement of 100 metric tonne into India has taken the overall quantity stored locally to over 408 metric tonne of gold, which means the local and foreign holding is now split almost evenly.
As per the annual report of the central bank for FY24, over 308 metric tonne of gold is held in India as backing for notes issued, while another 100.28 tonne is held locally as an asset of the banking department. Of the overall gold reserves, 413.79 metric tonne are held abroad.
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The decision to repatriate gold comes amid a broader trend observed among central banks worldwide.
According to an Invesco Global Sovereign Asset Management Study 2023, central banks are increasingly favouring physical gold holdings within their own countries over overseas storage.
One Western central bank, cited in the report, said, “We increased the exposure 8-10 years ago, and transferred gold reserves back to the country – we did have it held in London and could use it to enhance yields and for swaps, but now we’ve transferred it back to own country to hold as a safe haven asset and to keep it safe.”
The Invesco study highlights a surge in central bank gold buying, driven by geopolitical tensions such as the Russia-Ukraine conflict and concerns over global economic stability.
Forecasts indicate that central banks are set to purchase over 1,000 tonnes of gold in 2024, marking one of the highest volumes of official sector gold purchases since the Nixon shock in 1971.
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First Published: Jun 2, 2024 11:29 AM IST