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Will gold reserves replace dollar? Govt answers amid Donald Trump’s warning to BRICS nations
Finance Minister Nirmala Sitharaman clarified in Lok Sabha that the Reserve Bank of India is not increasing gold reserves to replace any international currency, amid global discussions on de-dollarization.
The Reserve Bank of India (RBI) is not increasing the reserves of gold to replace any international currency, Finance Minister Nirmala Sitharaman on Monday clarified in the Lok Sabha.
Her response comes after Congress MP Manish Tiwari questioned whether the global shift to gold signalled a move away from the US dollar as a form of exchange.
“Gold is also kept in the Reserve Bank and gold is also being bought by the Reserve Bank. But beyond that, as regards an international currency or potential currency, there is not much for me to comment at this stage,” FM Nirmala Sitharman said.
Question on shift to gold
The Congress MP said that the US got away with the gold standard in 1971 as the metal lost its significance as a major financial asset. However, central banks across the globe have increased their gold reserves. In 2006, gold constituted 6 per cent of global reserves, while the portion went up to 11 per cent in 2024. Countries such as China, India, Poland, and Turkey have been stocking up gold aggressively.
"This shift away from the dollar to gold, does it indicate a renewed search for an alternative international settlement mechanism being cost the dollar?" the Congress MP asked.
Her clarification comes at a time when discussions around de-dollarisation have gained momentum across the globe as some countries explore alternatives for trade and reserves.
While replying to the question, FM Nirmala Sitharaman accepted that the demand for gold has grown due to the traditional preference of Indian households, small businesses, and women as a secure form of investment.
"I think it is very typical of India, particularly for households of small businesses and, it is normally said, women, but general households also, and women also, to invest in gold because they think it's far more secure and far more liquid" FM Nirmala Sitharaman said.
While speaking about RBI's gold purchases, she mentioned that the central bank is accumulating gold to maintain a balanced reserve portfolio. Among the foreign exchange reserves, the dollar is still dominant, while the RBI keeps reserves in other currencies and gold.
FM Nirmala Sitharaman confirmed that the purchase of gold aims to diversify reserves rather than indicate that India is shifting away from the dollar or pushing for an alternative international settlement mechanism.
Govt stance on de-dollarisation
Earlier, the Ministry of Foreign Affairs clarified that India does not have any policy regarding de-dollarisation.
“On de-dollarisation, the External Affairs Minister has made it clear that we don’t have any policy or strategy in this regard,” External Affairs Ministry spokesperson Randhir Jaiswal said.
Donald Trump's warning
US President Donald Trump has actively opposed de-dollarisation, stating that BRICS countries must uphold the US dollar's role in global trade or risk facing economic repercussions.
“The idea that the BRICS Countries are trying to move away from the Dollar, while we stand by and watch, is OVER," Trump posted on Truth Social after assuming power as the President of the US.
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Business NewsEconomyWill gold reserves replace dollar? Govt answers amid Donald Trump’s warning to BRICS nations
First Published:10 Feb 2025, 08:38 PM IST
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