Economist: India's Central Bank May Have Sold $12 Billion in Gold Reserves to Replenish Foreign Exchange Assets
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A Bloomberg economist estimates India's central bank sold roughly $12 billion in gold over two weeks while buying $7.5 billion in FX assets — a sign that gold reserves have shifted from a rainy-day stockpile to frontline ammunition in the rupee's defense.
Where did $12 billion in gold go?
Bloomberg senior India economist Abhishek Gupta reported on June 2 that the Reserve Bank of India (RBI) likely sold ~$12 billion in gold reserves in the two weeks ending May 22, while purchasing ~$7.5 billion in foreign-exchange assets.
The telling clue: India raised gold import duties during the same period, which should have lifted the book value of RBI's gold holdings — yet the value fell.
This means → book value should have risen but dropped. The only explanation is that RBI was actively selling gold.
Why tap the "last-resort" asset?
Since March, escalating Iran-related tensions pushed global oil prices up ~16%, foreign capital fled Indian equities, and the rupee hit an all-time low.
RBI was forced into massive dollar sales to defend the currency — for full-year FY2026, it net-sold $53.1 billion on the spot market, roughly $12 billion more than the prior year.
In plain terms = dollar ammunition was burning too fast; FX reserves alone could no longer keep up, so gold had to be converted into fresh firepower.
How far has the FX reserve "water level" dropped?
India's foreign-exchange reserves fell from a record $728.5 billion on February 27 to $688.9 billion on May 15 — nearly $40 billion evaporated in two and a half months.
Bankers estimate RBI spent roughly $12 billion in just the first week of March to stabilize the rupee.
This reflects a "war on multiple fronts": oil prices, capital outflows, and currency pressure all hit simultaneously, draining RBI's reserves far faster than normal.
How much gold is left in the war chest?
As of end-March, RBI held 880.52 tonnes of gold, with roughly 77% stored domestically.
If the $12 billion sale is confirmed, it would represent roughly 15% of total gold holdings at current prices.
This means → RBI still has room in the short term, but if the rupee stays under pressure and oil prices do not retreat, this last card will thin out fast.
Content is for reference only, not financial advice.