Hyderabad: Reserve bank of India (RBI) is investing more in the gold. As per the official data, the central bank's gold reserves rose by USD 666 million to USD 28.058 billion as on January 3, 2020.
In the last one decade, the share of gold in the forex reserves basket has seen a tremendous rise. As on October 2, 2009 RBI had 10.316 billion worth of gold out of 280.340 total forex reserves amounting to 3.67 percentage share.
Whereas as on January 3, 2020, the share of gold was 6.08 per cent (USD 28.058 billion) out of the total forex reserves of USD 461.157 billion.
Besides gold RBI's forex reserves include foreign currency assets, special drawing rights with the International Monetary Fund (IMF) and the reserve position with the IMF.
Global Phenomenon
Dr.K. Srinivasa Rao, Adjunct Professor in National Institute of Insurance and Risk Management, Hyderabad said "The phenomenon of adding increased gold components in managing forex reserves is not confined to RBI. 9 Central banks have added to gold stock during 2019. Poland was the largest buyer in the quarter adding 100 tons, a single purchase in Q2 of 2019."
"Buying momentum increased from last year 2018 that saw highest purchase in 50 years according to World Gold Council. Due to increasingly volatile financial markets and geopolitical unrest, central banks have opted to protect themselves in the face of looming risk. India bought 200 tons from IMF in November 2019. It is strategic move of central banks for safeguarding the financial security of the country" he added.
Record Forex Reserves
The country's foreign exchange reserves touched a record high of USD 461.157 billion, after it surged by USD 3.689 billion in the week to January 3, according to the RBI data.
In the previous week, the reserves had risen by USD 2.52 billion to USD 454.948 billion.
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The rise in reserves was mainly on account of an increase in foreign currency assets, a major component of the overall reserves, which rose by USD 3.013 billion to USD 427.949 billion.
Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the forex reserves.
The special drawing rights with the International Monetary Fund were up by 7 USD million to USD 1.447 billion.
The country's reserve position with the IMF increased by USD 3 million to USD 3.703 billion, the data showed.
