The central bank of India (RBI) sold approximately 12 billion USD of gold from its reserves in 2 weeks in May to increase its foreign exchange assets against the backdrop of the conflict in the Middle East, Bloomberg reported, citing experts.
According to their estimates, the gold sales allowed the RBI to purchase liquid foreign exchange assets worth 7.5 billion USD. This helped stabilize the Indian rupee amid a foreign investment outflow from India and helped maintain the level of the country's foreign exchange reserves, which had been depleted by large energy purchases despite rising global prices due to the Middle East conflict.
The RBI is expected to continue accumulating foreign exchange reserves amid a weakening US dollar, renewed foreign capital inflows and lower crude oil prices.
As the Reserve Bank of India had earlier reported, its gold reserves had crossed 880 metric tonnes by the end of March, 77% of which was held domestically. The bulk of India's gold reserves were held abroad at the Bank of England and the Swiss Bank for International Settlements.