India buys 200 tonnes of gold from IMF reserves

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The IMF has announced it had sold 200 tonnes of gold to the Reserve Bank of India over the past two weeks. Traders reported that the huge sale had intensified interest in gold, which has now risen by almost 23% this year.

India said it was keen to diversify its reserves away from the US dollar, which has weakened in recent months.

Pranab Mukherjee, India’s finance minister, said: “We have money to buy gold. We have enough foreign exchange reserves.”

Erik Nilsson, senior economist at Scotia Capital, said the deal was “certainly indicative that the monetary authorities in India are not overwhelmingly upbeat about the outlook for the US dollar”.

The dollar has lost 6.5% of its value in the last five months, measured against a basket of other currencies. This has helped to push up the price of commodities priced in dollars, including gold and oil…

The IMF declined to say how much India had paid for the gold, saying only that it got “a good price”.

One would hope they did.