India's central bank is reported to have sold $12 billion worth of gold to save foreign exchange reserves.

Bloomberg Economics analysis suggests that the Reserve Bank of India may have sold some of its gold reserves to protect its foreign exchange assets from the impact of the Middle East war chain. Senior Indian economist Abhishek Gupta wrote in a report that in the two weeks ending on May 22, the Reserve Bank of India may have sold about $12 billion worth of gold reserves while buying $7.5 billion in foreign exchange assets. Despite India raising gold import tariffswhich should increase the value of its gold and dollar assetsthe value of gold reserves in the central bank's report has declined. Gupta believes this indicates that the RBI is selling gold. The Reserve Bank of India has not responded to requests for comment on this alleged sale. This apparent selling behavior highlights policymakers' concerns about the pressures facing India. With ongoing tension in Iran and the Strait of Hormuz essentially blocked, India is facing the dual pressure of continuous capital outflows and rising oil prices. This also indicates that, against the backdrop of an expanding current account deficit, the RBI is prioritizing the protection of liquid foreign exchange reserves. According to previous reports, RBI Governor Shaktikanta Das is weighing all available options to stabilize the rupee exchange rate, including raising interest rates and raising US dollar funds from overseas investors. The RBI's intervention in the foreign exchange market has shown initial effectiveness, with the rupee's performance better than most Asian currencies since hitting a historic low on May 20. On Tuesday, the rupee fell by 0.2% to 95.20 rupees per US dollar. As the world's third-largest oil importer, India is rapidly depleting its foreign exchange reserves due to the Middle East war pushing up energy costs and severely impacting the currency. The Indian government has intensified efforts to curb capital outflows and mitigate the economic impact of the war, including raising fuel prices and more than doubling the import duty on precious metals. It is expected that authorities will announce further measures this week to support the rupee exchange rate. Gupta believes that the RBI may continue to rebuild foreign exchange reserves when conditions permit. He wrote, "Periods of a weaker dollar, inflows of foreign capital, or falling oil prices will provide opportunities to increase foreign exchange assets." As of the end of March, the RBI held a total of 880.52 tons of gold, with 77% stored domestically. This ratio was 66% six months ago. The RBI's half-yearly foreign exchange report released in April stated that most of its overseas gold reserves are held at the Bank of England and the Bank for International Settlements. In recent years, the RBI has significantly accelerated the pace of repatriating gold to the country, demonstrating growing concerns about the risks faced by its overseas reserve assets, similar to other emerging market central banks, after Russian assets were frozen by the West.