RBI looking into record high gold imports

The sharp rise in gold imports has drawn the central bank’s attention and it is studying the factors contributing to this.

Reserve Bank of India (RBI) Governor D Subbarao on Tuesday said they were looking into the reasons. “We are trying to solve why gold imports were at a record high,” he said. This, coupled with high oil imports, had led to widening of the current account deficit, which in turn contributed to rupee depreciation.

In 2011, the country imported 969 tonnes of the yellow metal, according to World Gold Council data. India’s gold import in 2010 was quite high, at 958 tonnes. Imports, however, have started tapering after the government recently quadrupled import duty. In value terms, imports in financial year 2011-12 were a little less then $60 billion. According to data released by the government yesterday, gold and silver imports in April and May came down to $4.3 billion, compared with $9.2 billion last year.

Referring to the issue of rupee depreciation, he said the fall in the currency exchange rate since March was because of both global and domestic factors. In the earlier phase of August to December 2011, the rupee had depreciated on the back of global uncertainty and had appreciated in the following phase, January to February 2012, due to measures taken by RBI.

“We will continue to follow the policy of intervening only to smoothen volatility in the foreign exchange market,” he said. The rupee has fallen 25 per cent in the past 12 months.