Modi asks Indians to hold off on gold purchases amid trade deficit pressure
Narendra Modi calls on Indians to delay gold purchases for at least a year as energy costs and the trade deficit pressure the rupee.
Indian Prime Minister Narendra Modi has urged people to avoid buying gold for at least one year to help preserve the country’s foreign-exchange reserves, amid pressure from the war in the Middle East, which has pushed up energy import costs and weakened India’s trade balance.
Modi said on Sunday that whether for festivals, weddings or special occasions, people should postpone purchases of gold jewellery for now. He also called on the public to reduce oil consumption and avoid unnecessary overseas travel, saying India spends large sums on gold imports, its second-largest import item after oil.
The move reflects the Indian government’s concern over the impact of the Middle East war, which is putting pressure on the rupee and widening the trade deficit. India is the world’s second-largest gold importer, while gold plays an important role in Indian life as a savings asset, wedding jewellery and a symbol of good fortune during religious festivals.
Following Modi’s remarks, shares of Indian gold producers and retailers fell immediately. Titan Company, one of the country’s major gold retailers, dropped by as much as 6.6%, while Senco Gold and Kalyan Jewellers fell by more than 10% and 9%, respectively.
Reports also said Indian banks have recently faced procedural obstacles in importing gold, which may have helped ease some pressure on India’s trade balance in April.
