As the world increasingly discusses the trend of "de-dollarization", Ms. Nirmala Sitharaman - Indian Finance Minister affirmed that the Reserve Bank of India (RBI) is not increasing gold reserves to replace the USD or any other international currency.
mint reported that speaking to the Indian House of Representatives, Sitharaman said the RBI's gold purchase was part of a foreign exchange reserve balance strategy, not a sign of looking for an alternative payment mechanism for the US dollar.
"Gold is still a part of the Reserve Bank of India's reserves, but the purchase of gold is not intended to replace any international currency," she stressed.
Minister Sitharaman's statement came after lawmaker Manish Tiwari questioned how central banks around the world are actively buying gold.
In 2006, gold accounted for only 6% of total global foreign exchange reserves, but by 2024, this figure had increased to 11%. China, India, Poland, Turkey and many other countries are hoarding gold at a rapid pace.
Member Tiwari asked: "Is the trend of shifting to gold a sign of looking for a payment mechanism to replace the US dollar?"
For decades, the USD has played the role of the world's leading reserve currency. However, changes in global politics and economics are prompting countries to seek other options, including gold.
Minister Sitharaman admitted that the increased demand for gold is not only due to central banks, but also due to the hoarding habits of the Indian people.
"Indians, especially women and small households, often choose to invest in gold because it brings safety and high liquidity."
The tradition of buying gold of the Indian people has been around for a long time. Whether it is a gift from a wedding or a reserve asset for the future, gold is always considered a safe asset. This also contributed to driving gold demand in India to record highs.
In response to speculation about India seeking to reduce its dependence on the US dollar, the country's Foreign Ministry has officially spoken out. "We have no policies or strategies regarding de-dollarization," said Randhir Jaiswal, a spokesperson for the Indian Foreign Ministry.
While many countries are looking for alternatives to the US dollar, US President Donald Trump has warned against this action, especially for BRICS countries (Brazil, Russia, India, China, South Africa, Iran, Ethiopia, Egypt, United Arab Emirates, Indonesia).
"The idea that BRICS countries are trying to get out of the US dollar while we are just waiting will end," Trump stressed. If BRICS countries continue to promote their own currency transactions or use gold instead of the USD, the US may take strong retaliatory measures, including taxing 100% of BRICS goods.
