India's foreign gold reserves hit lowest level in 6 years
India's overseas gold reserves have hit a six-year low, with the Reserve Bank of India (RBI) transferring large quantities of the precious metal back to domestic vaults. As of March 2024, only 47% of India's total gold reserves were held overseas, the lowest level since December 2017 when RBI started accumulating gold. This shift began in March 2022, coinciding with Russia's invasion of Ukraine and the subsequent freezing of Russian foreign currency assets by the US.
RBI transfers 100 tons of gold from UK to India
In May 2024, the RBI relocated over 100 tons of gold from the UK to India, marking one of the largest movements of gold for the country since 1991. The move was prompted by ample domestic storage capacity, according to RBI Governor Shaktikanta Das who urged that "nothing more should be read into it." This significant shift comes after a period when India had pledged part of its gold reserves in 1991, to address a foreign exchange crisis.
Global trend sees central banks repatriating gold reserves
Historically, India has stored its gold reserves in foreign banks for convenience and ease of trade. However, geopolitical tensions and economic uncertainties have led to increased concerns about the safety of global assets. This has resulted in a growing trend among central banks worldwide to move their gold reserves back to their own countries. By March 2024, domestically held gold made up 53% of India's total reserves, up from 31% in September 2021.
Gold repatriation: A logistical feat reducing storage expenses
The relocation of gold back to India required meticulous planning and execution, involving various government agencies, including the Finance Ministry and local authorities. A dedicated aircraft was used for transportation, accompanied by extensive security measures. Despite the logistical challenges, this move is expected to help the RBI reduce some of the storage expenses paid to the Bank of England. The gold is now securely stored in RBI's vaults located in Mumbai and Nagpur.
