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The Reserve Bank of India (RBI) has given approval to Indian residents to hedge gold on recognised exchanges in the International Financial Services Centre (IFSC). “It has been decided to permit resident entities to hedge their gold price risk on recognised exchanges in the International Financial Services Centre (IFSC). The related instructions will be issued separately," RBI Governor Shaktikanta Das said while making Monetary Policy Committee (MPC) announcements.

‘The RBI’s approval to hedge gold at IFSC is a positive move and a major enabler for gold importers and exporters using yellow metal as the primary raw material for production. This will help increase the price competitiveness of the Indian jewellery industry," said Colin Shah, MD, Kama Jewelry. 

What is the current rule related to gold hedging?

Resident entities in India are currently not permitted to hedge their exposure to gold price risk in overseas markets.

What is gold hedging?

The yellow metal is used to hedge macroeconomic events. Hedging allows gold fabricators and dealers to lock in prices and reduces exposure to price risk

Who will benefit from gold hedging?

It will help players hedge their positions against price fluctuations and unfavourable currency movement. This will also lead to an increase in volumes and activities at IFSC, said Colin Shah.

Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday announced the Monetary Policy Committee's decision of hiking repo rate by 35 basis points to 6.25 per cent. 

Shaktikanta Das also said that the worst of inflation is behind us, but there is no room for complacency in the fight against price-rise. He further added that from a growth perspective, India stands out as an isle of resilience in a "gloomy world".

 

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