The Reserve Bank of India (RBI) now retains over 65% of its gold reserves domestically, a significant increase from approximately 38% just a year prior. This shift is part of a strategic repatriation of gold that commenced after Western nations, including the United States and European Union, froze Russian reserves following its invasion of Ukraine.
In the first half of the financial year that began in April, the RBI repatriated nearly 64 tons of gold, according to its half-yearly report on foreign exchange reserves released on Tuesday. This brings the gold’s share of total reserves to 13.92% as of the end of September, up from 11.70% at the end of March. Traditionally, the RBI has maintained a portion of its gold overseas, specifically stored at the Bank of England and the Bank for International Settlements.
As of September 30, the RBI’s total gold holdings reached 880 tons, with 576 tons now stored within India, marking an all-time high. In comparison, the local gold reserve was only 38% of the total in September 2022. While the RBI did not specify the reasons behind this shift, it is widely believed to be aimed at enhancing control over the country’s bullion assets. Finance Minister Nirmala Sitharaman indicated last month that the RBI is making a “very considered decision” to diversify its reserves.
The RBI is also among the world’s largest purchasers of gold, aiming to lessen dependence on the US dollar and associated assets. The bank has been gradually reducing its holdings of US Treasuries since prior to the implementation of a 50% tariff imposed by former President Donald Trump on India for acquiring Russian oil.
As of October 17, India’s total foreign exchange reserves stood at $702.3 billion, making it the fourth largest in the world and sufficient to cover over 11 months’ worth of imports.
