The Reserve Bank of India has reportedly sold a portion of its gold holdings to protect its foreign-currency assets amid the falling rupee, which could be worth roughly around $12 billion in May, according
to a report by Bloomberg.
The analysis by Bloomberg reported that despite a gold import duty hike, the RBI’s gold holding value has seen a drop, suggesting the selling by the central bank.
The report added that the purported sales highlights policymakers’ concerns about the pressure India is facing from sustained capital outflows and higher oil prices amid the ongoing Iran-US war.
RBI is prioritizing reserves of liquid foreign currency as wider current-account deficit weighs on the rupee, it added.
Earlier, reports suggest that the RBI governor, Sanjay Malhotra, is considering all options to stabilize the rupee, including a repo rate hike and raising dollars from investors overseas.
Rupee has emerged as the most undervalued currency in Asia region, dropping to a record low of 96.95 before recovering. It has fallen almost 9 per cent in 2026 alone.
The elevated crude oil prices triggered by Iran-US war and closure of the Strait of Hormuz have put pressure on India forex reserve, given the high import bill, roughly around 90 per cent requirement.
The government has stepped up efforts to limit foreign currency outflows and shield the economy from the impact of the ongoing conflict. Measures announced so far include higher fuel prices and a more than twofold increase in import duties on precious metals. Policymakers are also expected to roll out additional steps as early as this week to support the rupee.
According to Bloomberg Economics economist Abhishek Gupta, the Reserve Bank of India (RBI) is likely to continue rebuilding its foreign exchange reserves whenever market conditions permit. Periods of a weaker dollar, renewed foreign investment inflows, or lower crude oil prices could provide the central bank with opportunities to replenish reserves while helping stabilize the rupee.
