Mumbai: After purchasing 200 tonne gold from IMF, India has now the highest gold reserves as a percentage of total forex reserves, among the Bric nations. India has $17.5-billion worth gold reserves, which is 6.66% of its total forex reserves estimated at $262.9 billion as November 13.
Brazil, till September 30, had $1.12-billion worth gold reserves and as a percentage of total forex reserves it is estimated at 0.5%. Russia during the same period had $17.67-billion worth gold reserves in its kitty, which is 4.27% of its total forex reserves. China during the same period has $33.89-billion worth of gold reserves, which is 1.49% of its forex reserve.
Meanwhile, according to the data released by Department of Treasury of United States on 17 November 2009, among the Bric countries, India has the least exposure into US Treasury Bonds as of September 2009.
India’s exposure to US treasury bonds with regards to its forex reserves has fallen to 12.81% , lower in comparison to May 2009 level pegged at 14.79%.
“This reduction may be due to the fact that India wants to re-channelise their forex reserves more into non-dollar assets. The recent acquisition of 200 tonne gold by India is also strengthening this view. With this less exposure to US Treasury Bonds means that, India is least vulnerable to US dollar depreciation in comparison to its Bric peers, with least exposure to US treasury bonds as a percentage of its forex reserves,” noted Jagannadham Thunuguntla, equity head with SMC Capitals Ltd.
As of September 2009, Brazil has 64.63% exposure (as a percentage of its forex reserves) to US treasury bonds while Russia has 29.46% and China has 35.15%.
Of late, on the back of severe economic recession of 2008, there are serious concerns in the global economic circles regarding increasing US deficit and hence possible downgrading of US sovereign credit rating by credit rating agencies.
Thus, countries like China are looking most vulnerable to any possible downgrades in the US as its exposure to US treasury bonds is about $798.9 bln.
Hence, any eventual crisis in US economy can leave more severe scars to the economies of China, Japan, Brazil and Russia than that of India.
Gold reserves held by India stood at $10.32 bln as on September 2009, Interestingly, India’s gold reserves have been increasing steadily from $9.2 billion in May 2008, down to $8.57 billion in September 2008,up in May 2009 to $9.60 billion and now to $17.5 billion, after the central bank purchased gold from the IMF.
Source : Financial Express