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India buys 200 tons gold from IMF

India buys 200 tons gold from IMF

Times of India
November 4, 2009

More than 18 years after New Delhi pawned 67 tons of gold to tide over a balance of payments crisis, the Reserve Bank of
India has bought thrice that amount of gold from the

International Monetary Fund to diversify its assets.

The IMF on Monday announced the sale of 200 metric tons of gold to the RBI, saying it represented almost half of the total sales volume of 403.3 metric tons that was approved by the Fund’s Executive Board in September.

Welcoming the purchase of 200 metric tons of gold by India’s RBI, IMF MD Dominique Strauss-Kahn said, “I strongly welcome this transaction with RBI.”

“It is an important step toward achieving the objectives of the IMF’s limited gold sales program, which are to help put the Fund’s finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries.”

For India, the purchase, apart from signaling that its economy has come full circle, is a way of spreading its assets which are said to be currently over-weighted with foreign currency, mainly in the form of sovereign US Treasury bonds. In other words, it is a hedge against a falling dollar.

India is the world’s largest private gold consumer, but the government’s holding of gold as an asset is modest. Even so, the latest purchase puts it at Number 10 among the list of top 10 gold-holders in the world.

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