New Delhi: India’s gold imports are likely to jump to 850-900 tonnes in the fiscal year ending March 2008, as a stronger rupee sparks a buying spree, the head of the precious metal’s largest purchaser said, on Wednesday.
Gold imports shot up 25% in April-July to 350 tonnes from 280 tonnes in the year-ago period, said Sanjiv Batra, chairman and managing director of government-run MMTC Ltd, which is headquartered in New Delhi and is India’s largest trading company.
In 2006-07, India imported 739 tonnes of gold, Batra said.
“Now that the festival season is starting, the trend should be good,” he said. “I think we should cross or touch maybe 850-900 tonnes this year.”
The rupee began the current financial year at 43.5 against the dollar, but strengthened to hit a nine-year peak of 40.20 in July.
On Wednesday, the rupee was trading at just over 41 to the dollar.
Last year, MMTC imported 140 tonnes of gold and has snapped up 58 tonnes in the first four months in this fiscal.
India’s main festival season starts from August-September and culminates in November with Diwali—the Hindu festival of lights—when gold buying traditionally peaks.
Batra said alternatives, such as gold exchange traded funds, have failed to take off since the first listing five months ago with people preferring to invest in physical gold.
India consumes nearly one- fifth of the world’s gold supply annually.
The new funds had attracted investments equal to just three tonnes of the precious metal.
In Asia, spot prices of gold on Wednesday fell to $655.20 (Rs26,863.20)/655.70 an ounce from $656.20/656.70 an ounce in New York on Tuesday.
Fears of a global liquidity crisis triggered a sell-off in financial markets last week that spilled into commodities and sent gold to a seven-week low of $641.10 on 16 August.
“We are getting a lot of enquiries,” Batra said. “People have got a shock in equitymarkets. They are planning to diversify.”
Batra said MMTC was planning to tie up with a prominent Swiss firm to make gold and silver medallions to meet growing demand.
The new unit would be completed in a year, he added.
“It will be for Indian demand as well as for exports, because manufacturing costs will be much lower than in Switzerland,” Batra said.
Although Batra refused to identify the firm, he said the Swiss firm was already supplying physical gold to banks in India.