NextFin News - The Reserve Bank of India (RBI) issued a rare and direct rebuttal on Wednesday, dismissing reports that it had offloaded a significant portion of its gold reserves to stabilize the rupee. The central bank’s intervention follows a Bloomberg Economics report suggesting that the RBI may have sold approximately $12 billion in gold over a two-week period ending May 22 to bolster its foreign-currency liquidity.
The controversy centers on an analysis by Abhishek Gupta, senior India economist at Bloomberg Economics. Gupta, who has a track record of closely monitoring India’s macro-fiscal health and often takes a data-driven, critical stance on reserve management, argued that the RBI likely pivoted toward liquid foreign-currency assets as Middle East tensions and rising oil prices pressured the national currency. According to Gupta’s report, the central bank’s strategy appeared to prioritize immediate liquidity over the long-term hedge provided by bullion, especially as the country’s current-account deficit widened.
However, the RBI countered this narrative by pointing to its weekly statistical supplements, which show that its physical gold holdings have remained stable or even increased slightly in recent months. Official data from the first quarter of 2026 indicated that India’s gold reserves stood at 880.52 tonnes, up from 880.18 tonnes at the end of 2025. The central bank characterized the suggestion of a $12 billion liquidation as "not correct," emphasizing that fluctuations in the value of gold reserves are primarily driven by mark-to-market valuation changes rather than active selling.
Gupta’s perspective currently stands as a minority view among institutional analysts. Most sell-side firms, including local giants like ICICI Securities and HDFC Bank, have not issued similar warnings of gold liquidation. These institutions generally maintain that the RBI is more likely to utilize its $600 billion-plus foreign exchange pile or engage in buy-sell swaps rather than dumping gold, which carries significant political and symbolic weight in India. The Bloomberg Economics analysis remains a scenario-based inference derived from gaps in reported currency assets versus total reserves, rather than a confirmed shift in official policy.
The discrepancy highlights the inherent volatility in interpreting central bank balance sheets during periods of geopolitical stress. While spot gold prices have surged to approximately $4,516 per ounce as of early June 2026, the high valuation itself can create the illusion of reserve shifts when reported in dollar terms. If the RBI were indeed selling, it would mark a radical departure from its decade-long accumulation trend. For now, the burden of proof remains on the analysts, as the central bank’s public stance and its most recent data filings continue to show a commitment to maintaining its bullion fortress.
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