RBI brings back more gold from abroad after West freezes Russia's reserves

By Anup Roy

 

India’s central bank now holds more than 65 per cent of its gold reserves at home, nearly double the share from four years ago, accelerating the repatriation of the precious metal after Western nations froze Russia’s reserves following the invasion of Ukraine. 

The Reserve Bank of India brought back nearly 64 tonnes of gold in the first six months of the financial year that began in April, it said in a half-yearly report on foreign exchange reserves Tuesday. In value terms, gold accounted for 13.92 per cent of total reserves at the end of September, up from 11.70 per cent at the end of March. The RBI generally keeps part of its gold overseas, held at the Bank of England and the Bank for International Settlements.

 

As of the end of September, the RBI held 880 tonnes of gold, of which 576 tonnes were stored domestically — an all time-high. Gold held locally accounted for about 38 per cent of the total in September 2022. 

  The RBI didn’t give a reason for the shift, but the move was aimed at likely enhancing control over the nation’s bullion assets after Group of Seven nations, including US, and the European Union, seized Russia’s reserves in 2022 following its invasion of Ukraine. Over the past four years, India’s central bank has repatriated nearly 280 tonnes of gold. Finance Minister Nirmala Sitharaman said last month the RBI was taking a “very considered decision” to diversify its reserves. 

The RBI is also among the top buyers of gold globally to reduce reliance on US dollars and related assets. It has steadily trimmed its holdings of US Treasuries — a process that began even before President Donald Trump imposed 50 per cent tariffs on India for buying Russian oil.

 

India’s total foreign-exchange reserves stood at $702.3 billion as of Oct. 17, the world’s fourth-largest, enough to cover more than 11 months of imports.