MUMBAI : The Reserve Bank of India is in initial stages of working out locational swap of gold in India with global quality gold at Bank of England, its sole overseas custodian of gold holdings. The idea is to hold top quality gold reserves.
Media reports have suggested that some of the old gold lying in the RBI’s vault in Nagpur is not of the same purity as the global standard. So, the central bank is attempting these swaps to maintain top quality of gold reserves. The gold and foreign currency reserves held by the RBI currently stand at $315 bln.
RBI said that the quantity, swap-ratio and timing of the gold swaps would be determined after due diligence and the necessary consultation with the government.
“It is expected that such swaps would be beneficial to the country in terms of the availability of LGD standard gold with the overseas custodian of RBI,” the RBI said in its email. Locational swaps are also seen as beneficial to availability of gold domestically. “Though the finer details of the transaction haven’t been released by the RBI, it is expected that this deal would boost supply in the domestic market and help bring down gold prices and also reduce smuggling which has been on the rise since the imposition of import controls,” India Forex Advisors report said. -Cogencis
