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Informist, Tuesday, Sep 17, 2024

--Govt: India Aug gold imports $10.06 bln

--Govt: India Apr-Aug gold imports $22.7 bln, up 25.1% on year

--Govt source: Gold imports high as RBI importing to build FX reserves

NEW DELHI - India's high gold imports are on account of the Reserve Bank of India's efforts to build its foreign exchange reserves, a government official said today.

Data released by the Ministry of Commerce and Industry today showed India's gold imports in August stood at $10.06 bln, nearly three times the $3.13 bln worth gold imported in July. For Apr-Aug, India's gold imports were 25.1% higher compared to the same period last year at $22.7 bln.

The sharp jump in gold imports in August compared to July comes after the Union Budget for 2024-25 (Apr-Mar) announced a reduction in the basic customs duty on gold to 6% from 15%.

Meanwhile, India's foreign exchange reserves – seen as a buffer against any pressure on the external side of the economy, including the rupee's exchange rate – were at a record high of $689.24 bln as on Sep 9 after rising by $5.25 bln from the previous week. The Reserve Bank of India's gold holdings, which form just under 10% of the reserves, amounted to $61.99 bln. However, the central bank has increased its holdings of the precious metal over time, adding 21 tn in 2024-25 until Jul 26 to take it to 843.38 tn.

The RBI deploys its foreign exchange reserves, which are among the top-five in the world, across various assets to meet its safety, liquidity, and returns criteria. According to the World Gold Council's 2024 Central Bank Gold Reserves Survey, central banks globally added 1,037 tn of gold in 2023 after a record purchase of 1,082 tn in 2022.

"Following these record numbers, gold continues to be viewed favourably by central banks as a reserve asset," the Council's survey report, published in June, noted, adding that 29% of surveyed central banks are looking to raise their gold reserves in the coming year.

"The planned purchases are chiefly motivated by a desire to rebalance to a more preferred strategic level of gold holdings, domestic gold production, and financial market concerns including higher crisis risks and rising inflation," the report said.  End

Reported by Kriti Ambey

Edited by Vandana Hingorani

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