RBI Has Been On Gold-Buying Spree: India's Ploy To Move Away From US Dollar? FM Nirmala Sitharaman Explains

New Delhi: The Reserve Bank of India (RBI) has been accumulating gold reserves in bulk in recent times. The yellow metal has been witnessing a red-hot form as the gold prices have seen a whopping surge of 10% so far in 2025. The rally is likely to continue as the geo-political situation makes the commodity a safe bet for investors. Ever since Donald Trump assumed office, the demand for gold has seen a further increase as he announced new tariff plans. It should be noted here that gold is considered a safer option when the market situation is in turmoil.

India's apex bank has been increasingly buying gold and the move has sparked speculations that the country is planning to move away from US dollar for international trade. However, when Congress MP Manish Tewari asked this question in the Lok Sabha, Finance Minister Nirmala Sitharaman clarified that India's rising gold reserves, including those held by the RBI, are not intended to replace any international currency.

Furthermore, Sitharaman confirmed that the RBI is actively purchasing gold as part of a strategy to maintain a well-balanced reserve portfolio, ANI reported. While the US dollar remains a key component of India's foreign exchange reserves, the RBI also diversifies its holdings with other currencies and gold. She further added that this accumulation is aimed at strengthening reserve stability rather than indicating a move away from the dollar or advocating for an alternative international settlement system.

Her statement comes amid rising global discussions on de-dollarization, with several nations exploring alternative trade and reserve mechanisms. However, she clarified that India’s growing gold reserves should not be interpreted as a shift in monetary policy or global financial alignment.

India’s foreign exchange reserves surged to $630.6 billion as of January 31, marking a $1.05 billion increase from the previous week. This was the second consecutive rise in forex reserves after a $5.5 billion jump in the prior week. The primary contributor to this growth was the sharp increase in gold reserves, which climbed $1.2 billion, reaching $70.89 billion.

In 2024, the RBI significantly ramped up its gold purchases, adding 72.6 tonnes—four times the incremental additions of the previous year. This positioned India behind only Poland and Turkey in net bullion purchases, as global currency markets saw high volatility following Donald Trump’s re-election in November.

By December 2024, the RBI's total gold holdings stood at 876.18 tonnes, valued at $66.2 billion, a notable increase from 803.58 tonnes worth $48.3 billion a year earlier. The 72.6-tonne gold purchase marked the highest annual acquisition since 2021 and the second-largest since the RBI resumed buying gold in 2017.

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