RBI Purchases Gold for the First Time in 10 Years

ArticleChange of moneySeptember 17, 2018 - 5:59:09 AM

RBI buys Gold for the First Time in Ten Years; China Sanctioned once again by Donald Trump ; CFTC Sentences BNP to Pay $90 Millions Fine

RBI Purchases Gold for the First Time In 10 Years

The Reserve Bank of India (RBI), located in Mumbai, recently invested in gold for the first time in nearly 10 years, suggesting that the metal should be in demand as a valuable reserve in a period of rising interest rates.

The RBI added nearly 8.46 tonnes of gold to its portfolio during the 2017-2018 fiscal year, reaching a gold reserve of 566.23 tons, thus 18.20 million Oz/troy in June 2018. A significant increase compared to November 2017, when the value was 17.9 million Oz/troy.

The RBI's decision to buy gold is significant for the country, investing in gold is a prudent measure by the Central Bank in a context of rising yields.

Indeed, the increase could lead to losses at the market value of the RBI portfolio.

The latter has already sold nearly $10 billions worth of US Treasury securities between April and June.

The increase in reserves of precious metals such as gold is a diversification of assets for the country's development. The RBI did not wish to disclose the reason for these transactions or the source of the gold. The central bank may also want to amortize the repayments of Gold Bond Schemes from 3 to 8 years, according to economists.

The RBI must repay these bonds at the prevailing metal price and maintain an additional stock of gold in stock to hedge against the risk of price fluctuations.


China Again Sanctioned by President Trump

In the midst of an economic war, new sanctions are being considered by the United States against China, one of the first times that the US government has sanctioned a country for human rights violations.

The United States threatens to impose new taxes to limit the sale of surveillance technologies that China uses to monitor camps where Uighurs and Muslim religious minorities are held.

The American president wants to create $267 billions in new tariffs on Chinese imports, or some 6,000 products from China, representing $200 billions in annual trade.

They would exceed the value of all Chinese products imported last year, which was $505 billions.

The Trump government is seeking to put pressure on Beijing through measures that go beyond customs duties. The violation of human rights is only a pretext to attack China, officials consider it as "an existential war of innovation with China".

However, if the US President's proposals were implemented, then China's response would be brutal.


CFTC Sentences BNP to Pay $90 Millions Fine

The CFTC, an U.S. federal regulators has ordered the French bank, BNP Paribas to pay a penalty of $90 million after ruling against the Bnp Securities Corps for attempting to manipulate the ISDAfix benchmark. ISDAfix is used by companies and investors for financial derivative transactions, commercial real estate mortgages and structured debt securities.

The Commodity Future Trading Commission (CFTC) accused the bank of attempting to manipulate the benchmark index from 2007 to 2012 to take advantage of its positions in derivatives in which several traders and supervisors were involved.

BNP Paribas traders and managers had deliberately traded at certain fixed prices at a specific time. In addition, BNP had submitted false reports in order to further steer the benchmark in a profitable direction.

The CFTC has stated that BNP's fine is the seventh enforcement measure under the ISDAfix law against the US dollar. Indeed, other major banks were involved in the ISDAfix case.

James McDonald (Director of Enforcement at the TCRC) said, "We will not stop until all offenders are held accountable, no matter how serious the situation is in the industry".

Source: BUNKER Gold&Silver

On the same subject