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India won’t free idle gold reserves

Despite rumours that the Reserve Bank of India may mobilize idle gold reserves and sell them to banks, the RBI clarified on Saturday that it had no intention of doing so, Reuters reports.

The country’s finance minister has been battling the ever-rising current account deficit (CAD) for some time now. In 2012 the central bank considered various measures including freeing up the reserves.

“There have been some news stories in the media in the last couple of days about the Reserve Bank of India discussing/considering various options of converting idle gold, including that available with temple trusts, into bullion,” the central bank told Reuters. “The Reserve Bank clarifies that no such proposal is under its consideration at this juncture.”

After oil, gold is the second largest contributor to India’s CAD. Massive imports of both commodities have been eating away at the country’s FOREX reserves and the value of the rupee, which hit an all-time low last week.  Attempts at curbing imports through quotas and duties have not had much effect.

Creative Commons image by: Mark Herpel