In a strategic move, Reserve Bank of India (RBI) had recently brought 102 tons of gold back to India from the vault of Bank of England. This was done around Dhanteras and reflects how RBI is trying to increase the gold reserves in the country at such uncertain global times. A big portion of RBI’s total gold reserve is now coming back to the country, reflecting the idea of saving this national treasure from the potential risks abroad.
This will send 102 tonnes of gold back to India as part of a larger strategy that has been devised to improve the economic security of India. According to reports, RBI now has about 510.5 tonnes within its domestic shores, out of 855 tonnes in total. The government is ascribing the move as one of geopolitical tensions as they believe it is safe to keep assets closer home. RBI has been quietly returning over 200 tonnes since September 2022 to support this security-oriented strategy.
To bring back 102 tons of gold to India is a strategic process
The operation to bring 102 tonnes of gold to India required meticulous planning and confidential nature from RBI and officials in the government. Certain concessions in tax levies are availed to transport these metals. This move by the authorities will strengthen India’s domestic reserves, sources mention, though no additional repatriation missions will take place this year, as reported.
Gold continues to be one of the key reserve assets for every central bank across the world, and RBI’s latest move to bring back the 102 tonnes of gold to India adds greater economic legitimacy to the nation.
Gold acts as an insurance product against currency and exchange rate risks; hence gold is the asset which goes up during a period of financial stress. Keeping ample reserves at home helps increase confidence among investors and thus greater economic agility of RBI while dealing with turbulent times in an international economy.
India’s domestic reserves of precious metal to be stabilized
The primary advantages of holding 102 tonnes of gold shifted back to India are the security features associated with it. Its contribution to the management of domestic bullion prices can help RBI. In fact, with growing demand for investments in gold in India, a strong domestic reserve is also likely to stabilize domestic bullion prices to the benefit of both the market and investors.
Although keeping some reserves abroad saves the hassle of trading through them, recent freezes of foreign assets because of geopolitical tensions have highlighted the importance of a balanced approach. RBI diversifies storage locations to ensure security and flexibility of access to the international market.
Also, see: How to Buy the Best Gold This Dhanteras: ETFs, SGBs, or FoFs?