KOLKATA: Portfolio managers who have been losing money in the past year — be it on gold or fixed income securities — need not feel bad. They are in the company of Reserve Bank of India. The central bank’s foreign exchange reserves in gold fell 15% in value between March and September last year, and the yield on reserves fell 2 basis points amid low interest rates across the developed world.
The RBI parks its foreign currency reserves with other central banks, Bank for International Settlements (BIS), overseas branches of commercial banks and sovereign and quasi-sovereign debt instruments.
Gold accounted for about 8% of the total foreign exchange reserves in value terms in September last year. The value of precious metals with RBI was $21.765 billion at the end of September last year, from $25.692 billion in March last year.
The RBI held 557.8 tonnes of gold, of which 265.5 tonnes are held abroad with the Bank of England and the Bank for International Settlements. Gold prices in India fell during the first half of last year on account of global softening of prices amid recession and a fall in demand for the yellow metal as a safe investment haven.
The foreign currency assets that are invested in multi-currency , multi-asset portfolios too have yielded less amid softening global interest rates. The rate of earnings on foreign currency assets slid to 1.45% during the July 2012 to June 2013 year from 1.47% during the July 2011-June 2012 period, the RBI said in a half-yearly report on foreign exchange reserves released a couple of days back.
About 63% of the central bank’s total foreign currency assets of $248.8 billion was invested in securities at the end of September 2013. Another 35% was deposited with other central banks, BIS and the IMF and the balance 2% was with foreign commercial banks and funds placed with external asset managers.