RBI Shifts 100 Tonnes of Gold From UK To India: What Does It Mean?
The Reserve Bank of India (RBI) has moved over 100 tonnes of gold from the UK to its domestic vaults. It marks the first time at least since early 1991 when the precious yellow metal at this scale has been added to the stock held locally, according to a Times of India report.
The Indian central bank will also be bringing more similar quantity of gold to the country in the coming months, according to the report. The report, citing sources, said the transfer to India was for logistical reasons and for diversified storage.
At the end of March 2024, the RBI held 822.10 tonnes of gold, of which 408.31 tonnes were held domestically.
Central banks globally have been increasing reserves held in gold, often seen as a hedge against currency volatility and geopolitical risks.
The RBI decided to move gold to India as the stock was building up overseas, TOI reported.
According to the latest note by the World Gold Council (WGC), the RBI bought 19 tonnes of gold in the first quarter of the current calendar year 2024 (Q1-CY24 / Q4-FY24). This dwarfs the 16 tonnes of gold it bought in the whole of 2023
The RBI started buying gold in the calendar year 2018. Before that, it had purchased 200 tonnes in 2009 during the global financial crisis.
What Does It Mean?
Cost Saving: Storing gold domestically could save the RBI money on storage fees paid to foreign custodians like the Bank of England.
Potential for More Gold Repatriation: The bringing back of gold to India highlights the RBI’s strategic thinking in managing its foreign exchange reserves.
Noted economist Sanjeev Sanyal, who is also the Prime Minister’s Economic Advisor, in a post on X said, “While no one was watching, RBI has shifted 100 tonnes of its gold reserves back to India from UK. Most countries keep their gold in the vaults of the Bank of England or some such location (and pay a fee for the privilege). India will now hold most of its gold in its own vaults. We have come a long way since we had to ship out gold overnight in 1991 in the midst of a crisis.”
For those of my generation, the shipping out of gold in 1990-91 was moment of failure that we will never forget. This is why this shipping back of gold has a special meaning, he added.