The Central Bank of India has started giving priority to gold instead of dollars. The Reserve Bank of India (RBI) has been increasing gold in its reserves since the beginning of this financial year, while gradually reducing investments in US Treasury securities, data from the RBI and the US Treasury Department showed. RBI's gold quantity has crossed 880 tonnes. Since the beginning of this financial year, the bank has added 600 kg more gold. In contrast, investment in US Treasury securities is at a seven-month low, now at $219 billion. The total value of India's foreign exchange reserves stood at $698 billion as of October 10. This year RBI bought 200 kg gold in the week ending 26 September and 400 kg gold on 27 June. At the same time, investment in American treasury securities has decreased since July.
Turning to gold as part of policy
Madan Sabnavis, chief economist at Bank of Baroda, said this appears to be part of a policy to diversify foreign exchange reserves. Gold is a good option, especially when there is a possibility of its value increasing. Considering the impact of US economy and tariffs, it makes sense to buy gold. The interest rate policy is also uncertain, hence investing in gold is considered the right step. India's investment in US treasury securities has declined from $227.4 billion to $219.7 billion, compared to $238.8 billion last year.
importance of gold increased
Due to rising gold prices, the value of RBI's gold reserves has crossed $100 billion for the first time to $102.365 billion. As of September 26, gold constituted 13.6% of RBI's foreign exchange reserves, whereas last year it was 9.3%. Even at the global level, central banks are increasing gold in their reserves. In August, global central banks added a total of 15 tonnes of gold to their reserves, according to the World Gold Council. The total investment of the world's central banks in US Treasury bills is $9.1 trillion. In this, Japan has the highest with $1.1 trillion, followed by UK with $899 billion and China with $730.7 billion. This move by RBI reflects the uncertainty in the economy and the need for safe investment, where gold is considered a safe option for both investors and central banks.
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