Why is RBI filling the country's treasury with gold?
To stop the falling rupee, the Reserve bank is adopting a strategy to increase the purchase of gold. By the end of the financial year 2025, there is a preparation to complete the target of buying a total of 50 tonnes of gold in a year. Its purpose is to increase the foreign exchange reserves as well as reduce the risk of changing the price of the currency. Apart from this, the volatility of the rupee in comparison to the US dollar is also to be reduced.
That is why the Reserve bank has increased the purchase of gold since the month of october itself. With this, the gold reserve will stand as an important pillar of India's foreign exchange reserve. Anyway, as a part of the foreign exchange reserve, the gold reserve had gone to a record high at the end of September. This made it very easy to stop the falling rupee against the US dollar.
india has bought 32.63 tonnes of gold till September
The Reserve bank has bought 32.63 tonnes of gold between april and September. In this way, India's gold reserve jumped from $52.67 billion to $65.74 billion in March. A Reserve bank report says that India's 324.01 metric tons of gold is kept in the safe custody of the bank of england and the bank for international Settlements.
In 1991, 87 tons of gold had to be mortgaged
The importance of gold reserve for india can be gauged from the fact that in 1991, india had to mortgage 87 tons of gold to avoid default and save its credibility. Only after this, india was able to get foreign exchange reserves for emergency, so that foreign exchange could be paid for imports. In the situation of foreign exchange reserves getting depleted due to high imports and falling rupee, the incident of 1991 is a lesson for India. For this reason also, the Reserve bank is insisting on increasing the gold reserve as much as possible.