Of this, $3 billion worth flows were only for index eligible bonds, said bond market analysts.
But the Reserve Bank is simultaneously adding to its stock of gold in reserves making aggressive gold purchases amid global uncertainties and adding $3.4 billion to its stock of yellow metal in reserves during the month. Compare this for the entire April-June period,during which the value of gold that was added to the reserves was worth $3.8 billion.
“We are building up gold reserves, the data is released from time-to-time” said RBI governor Shaktikanta Das at the post policy media conference on April 5. “All aspects while building up the reserves are assessed and then we make a decision.”
The central bank’s stated objective of holding gold in reserves is mainly to diversify its foreign currency assets base, as a hedge against inflation and foreign currency risks.The central bank has bought 37 tonnes of gold between January and June this year compared to 16 tonnes it purchased in the entire calendar year of 2023. The RBI’s stock of gold reserves is at 846.76 tonnes as of end June according to the latest RBI dataSuch a surge in gold purchases despite rising bullion prices is largely reflective of the central bank strategy towards safety and protecting the value of its reserves amid uncertainty in outlook caused by wars in west Asia and east Europe.The Reserve Bank is one of the top three central banks to accumulate gold in the first quarter of the calendar year according to the World Gold Council data with only Turkey and China’s central bank buying more gold than India.A combination of foreign exchange inflows and a surge in the value of gold in reserves took the country’s foreign exchange reserves to a record $675 billion as of August 2. A portion of the rise in reserves is largely due to a surge in NRI deposits and FDI flows, according to the central bank. A part of the surge in reserves could also be due to revaluation of non-dollar assets vis a vis the dollar.
Overall, India’s external sector remains resilient as key indicators continue to improve.53 We remain confident of meeting our external financing requirements comfortably, according to the Reserve Bank’s August policy statement.
