A ‘golden’ fix for India’s forex stress?
In India, gold has huge sentimental value, has cultural and religious connections; but it has also been leveraged by governments during emergencies, be it during wars or economic crises. Most recently, in the early 1990s, when India faced an economic crisis, the government and the Reserve Bank of India saw a ‘golden’ opportunity. To bolster the country’s forex, the RBI was fully on board when the State Bank of India pledged 20 tonnes of gold confiscated from smugglers with the Union Bank of Switzerland in May 1991 to raise about $200 million.
- ▪In India, gold has huge sentimental value, has cultural and religious connections; but it has also been leveraged by governments during emergencies, be it during wars or economic crises.
- ▪Most recently, in the early 1990s, when India faced an economic crisis, the government and the Reserve Bank of India saw a ‘golden’ opportunity.
- ▪To bolster the country’s forex, the RBI was fully on board when the State Bank of India pledged 20 tonnes of gold confiscated from smugglers with the Union Bank of Switzerland in May 1991 to raise about $200 million.
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Advertisement In India, gold has huge sentimental value, has cultural and religious connections; but it has also been leveraged by governments during emergencies, be it during wars or economic crises. Most recently, in the early 1990s, when India faced an economic crisis, the government and the Reserve Bank of India saw a ‘golden’ opportunity. To bolster the country’s forex, the RBI was fully on board when the State Bank of India pledged 20 tonnes of gold confiscated from smugglers with the Union Bank of Switzerland in May 1991 to raise about $200 million. But this wasn’t enough. With forex reserves plummeting to just $1.1 billion in June, barely enough to pay for 2-3 weeks of essential imports, the RBI proposed pledging 50 tonnes of gold to raise foreign exchange.
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