India's Gold Reserves: Clarity Amid Global De-Dollarization Talks

Finance Minister Nirmala Sitharaman clarified in Lok Sabha that India's growing gold reserves aim to diversify rather than replace international currency, particularly the US dollar. Addressing MP Manish Tiwari's concerns, she emphasized gold's role in a balanced reserve portfolio amidst ongoing global discussions on alternatives to dollar dominance.

Addressing the Lok Sabha on Monday, Finance Minister Nirmala Sitharaman clarified that India's increasing gold reserves, including those managed by the Reserve Bank of India (RBI), are not aimed at replacing any international currency. Her statement was a response to Congress MP Manish Tiwari, who raised concerns that the global shift towards gold might indicate a move away from the US dollar's dominant role in international settlements.

Sitharaman remarked, "Gold is also kept in the Reserve Bank, and gold is also being bought by the Reserve Bank. But beyond that, as regards an international currency or potential currency, there is not much for me to comment at this stage." Tiwari pointed to the global trend of increasing gold holdings by central banks, noting that the percentage of gold in global reserves has almost doubled from 2006 to now. The spike in gold purchases by countries like China, India, Poland, and Turkey in recent years has coincided with rising domestic gold prices in India.

MP Tiwari questioned if this shift from the dollar to gold indicates a search for alternatives to the dollar for international settlements. Sitharaman responded by acknowledging that India's gold demand remains robust, spurred by traditional preferences. She noted that Indian households, small businesses, and specifically women favor gold for its perceived security and liquidity. She confirmed that the RBI's gold purchases are part of a strategy to maintain a balanced reserve portfolio, while also holding reserves in other currencies and gold, complementing the dominant US dollar component.

Sitharaman emphasized that the accumulation of gold is a strategic move to diversify India's reserves, not a signal of a shift away from the dollar or a push for alternative international settlement mechanisms. Her statement comes amid increasing global dialogue on de-dollarization, with some nations considering trade and reserve alternatives. Despite this, she assured that India's rising gold reserves do not suggest any such transition. (ANI)