RBI diversifying reserves from dollar – Times of India


MUMBAI: RBI governor Shaktikanta Das said on Monday that the central bank started diversifying its reserves out of dollars six months ago. At the same time, he said that the reserves cannot be spent as they are not “our money” but represent a liability.
The governor’s comments were made during an interaction with industry leaders at a CII National Council meeting here. Das was responding to a question on the need to relook at reserve investment strategy in view of the West freezing Russia’s reserves held overseas as a part of sanctions.
Das said he did not foresee a situation where India would face sanctions. “We are a democracy, we have the rule of law and India doesn’t have any expansionary ambitions. This is something which I think the government has stated and these are not my words,” said Das. “We don’t foresee sanctions but yes, it is something, which going forward, now I think every country will start thinking about.”
On diversification of reserves, Das said that India’s forex holdings are distributed in various foreign currencies not just concentrated in one. “We have gold reserves, which are dispersed partly in India and partly outside…The other issue is that you hold your reserves as what? Are you going to move completely towards gold? Liquidity also should be there,” said Das.
He said that at present there was no need to talk about issues that don’t exist and these are issues best left to the central bank. “I can only say that at this point of time our reserves are distributed in many currencies, but yes, the majority of which is without doubt dollars and we have decided to diversify, not now but some six months ago we decided to diversify into other currencies.”
Explaining why India’s forex reserves cannot be used for domestic investment, Das said that these reserves represent liabilities of the country. He said that while today the reserves were more than the external debt, the situation could change. “Reserves are something which add a lot of stability and confidence in any economy,” said Das.
According to data released by the US government of the $7.7 trillion of treasuries that are held internationally, India holds $199 billion as of December 2021, which is down nearly 10% from $220 billion in June 2021. Of RBI’s 744 metric tonnes of gold reserves, 451 is overseas in safe custody with the Bank of England and the Bank for International Settlements and the rest is in India.


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