Source: This post on RBI’s Major Move: Repatriation of 100 Tonnes of Gold to India has been created based on the article “Explained : Why RBI moved 100 tonnes of gold from the UK to domestic vaults” published in Economic Times on 4th November 2024.
Why in news?
The Reserve Bank of India (RBI) recently moved over 100 tonnes of gold from the UK to its domestic vaults, marking the largest repatriation since the early 1990s.
About the repatriation of 100 Tonnes of Gold to India
1. Significant Repatriation of Gold: This decision emphasizes the RBI’s evolving approach to gold reserve management and reflects confidence in India’s economic stability.
2. Rationale Behind the Move:
i) Logistical Efficiency: Bringing the gold back to India enhances logistical control and reduces dependency on foreign storage.
ii) Cost Savings: By storing the gold domestically, the RBI saves on storage fees that would have otherwise been paid to foreign custodians, such as the Bank of England.
iii) Diversified Storage: This move promotes diversified storage locations, mitigating risks associated with holding reserves abroad.
Note: As of March 2024, the RBI holds a total of 822.10 tonnes of gold. With this transfer, the quantity of gold stored domestically rose to approximately 408.31 tonnes, indicating a shift towards holding more reserves within India.
3. Strategic Approach to Foreign Exchange Reserves: The repatriation of gold showcases the RBI’s proactive strategy to safeguard India’s economic interests by reducing reliance on foreign storage facilities.
The move also aligns with a global trend among central banks to increase gold holdings, providing a hedge against currency volatility and geopolitical risks.
4. Implications for Future Actions: Following this move, the RBI may consider repatriating additional gold to India. This approach aligns with their goals of logistical efficiency, cost reduction, and further diversification of storage locations, potentially strengthening India’s economic security.
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