The Reserve Bank of India (RBI) has stated that reports suggesting it is selling gold are "untrue," pointing out that data shows its physical gold holdings have remained unchanged.

Latest figures from the RBI's monthly bulletin indicate that physical gold inventories were stable at 880.52 tonnes in April. The central bank confirmed in a statement on Wednesday that gold stocks remained at this level up to that date. Additionally, a post on the X platform by the Press Information Bureau (PIB) stated that as of March 31, the proportion of gold within India's foreign exchange reserves had risen to 16.7%, up from approximately 14% at the end of September last year.

However, an economic research report released by media on Tuesday estimated that over the two weeks ending May 22, the RBI might have sold gold reserves worth around $12 billion while purchasing foreign exchange assets valued at $7.5 billion.

The most recent data available, for the end of March, shows that about 77% of the RBI's gold reserves are now held domestically, an increase from 66% last September.

This clash between official denial and institutional speculation stems from India's recent battle to defend its currency. As a major oil importer, India has faced capital outflows due to high oil prices exacerbated by Middle East tensions, causing the rupee to hit a record low against the US dollar. The media's conjecture that the central bank was "selling gold for dollars" was to replenish US currency for market intervention. The RBI's swift clarification aims to prevent market misinterpretation of its asset allocation, which could trigger panic in both the rupee and gold markets. Furthermore, the trend of India repatriating nearly 80% of its gold "back home" underscores the deep-seated considerations of emerging market central banks regarding asset security amidst the broader shift away from the US dollar.