India's central bank buys 200 tons of IMF gold for $6.7 billion

Nov. 3, 2009, 8:02 a.m. EST · Recommend · Post:
India's central bank buys 200 tons of IMF gold for $6.7 billion

By MarketWatch

HONG KONG (MarketWatch) -- India's central bank confirmed Tuesday it had purchased 200 tons of gold bullion from the International Monetary Fund, effectively boosting its holdings by more than 50% and diversifying its $285 billion foreign-exchange stockpile.

The sale was part of the IMF's previously announced plan to sell 403.3 metric tons of bullion as part of efforts to shore up the institution's finances.

India paid $6.7 billion for the bullion, which was purchased during a two week period ending Oct. 30.

The Reserve Bank of India (RBI) said the gold purchase was part of its foreign exchange reserve management operations.

Its gold holdings were valued at $10.32 billion, or about 3.6% of its $285.52 billion forex reserve stockpile, according to newswire reports that cited figures from RBI Friday.

The recent purchase will lift India's bullion holdings to 557.7 tons, making it the 11th largest holder of the yellow metal among the world's central banks, according to newswire calculations based on September quarterly data from the World Gold Council.

The sale will "help put the Fund's finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries," IMF Managing Director Dominique Strauss-Kahn said in a statement Monday.

The sale was handled privately and based on the prevailing market prices, the IMF said. Settlement is still ongoing it said.

hmmmmm.....didn't say how much China got.

LittleKracker find:

IMF sells gold to India's central bank
11/3/2009, 10:31 a.m. EST
HARRY DUNPHY
The Associated Press

(AP) — WASHINGTON - The International Monetary Fund has sold 200 metric tons of gold worth $6.7 billion to India's central bank as part of an effort to shore up IMF finances and increase low-cost lending to developing countries.

The amount represents almost half the total sales volume of 403.3 metric tons approved by the IMF in September, the lending organization said Monday, a decision anticipated for more than a year and discounted by gold markets.

China, India and Russia have indicated interest in such purchases as a way of reducing their position in dollar-denominated securities, particularly since the steep fall in the dollar's value. The purchases also serve as a way of increasing these countries' influence at the Washington-based IMF.

But analysts had expected China to become the first purchaser of IMF gold. China's foreign reserves, already the world's largest, hit a record high $2.273 trillion by the end of September, its central bank reported.

Countries with economies that are gaining strength, such as China, India and Brazil, have long complained of U.S. and European dominance at the IMF. The United States is the IMF's largest shareholder.

The head of the IMF, Dominique Strauss-Kahn, welcomed the transaction with the Reserve Bank of India.

"This transaction is an important step toward achieving the objectives of the IMF's limited gold sales program, which are to help put the fund's finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries," he said in a statement.

The sale took place over a two-week period that ended Oct. 30, the IMF said, with each daily sale conducted at market prices prevailing that day.

The IMF said it was ready to sell gold directly to central banks and other official holders such as development banks that may be interested in such sales.

After that, the IMF said, any amounts remaining from the 403.3 metric tons would be sold in a phased manner over time, with the lending organization informing markets before any sales begin and reporting regularly to the public on such transactions.

The 186-nation IMF, founded after World War II to monitor the global economy, is the third largest official holder of gold in the world with 3,217 metric tons after the United States and Germany.