The Reserve Bank of India may have sold gold worth about $12 billion in May to protect foreign exchange reserves, Bloomberg reported on Tuesday. The Union government denied the claims.

RBI bullion reserves may have fallen in the two weeks till May 22 even as foreign currency assets increased by about $7.5 billion, according to Bloomberg Economics’ analysis of publicly available data.

The pattern pointed to possible gold sales by the central bank, the news outlet claimed.

The decline in reported gold values came despite an increase in import duties on the metal, which would have normally raised the valuation of the central bank’s gold holdings.

On May 13, India raised import tariffs on gold and silver to 15% from 6% to reduce imports of the precious metals and ease pressure on the country’s foreign exchange reserves.

The move had come after Prime Minister Narendra Modi urged citizens to avoid buying gold and adopt “nationally responsible” lifestyle choices to help the country withstand global economic uncertainty caused by the war in West Asia.

The divergence points to the possibility of gold having been sold by the central bank during the period, the Bloomberg report claimed.

Such a move, if confirmed, would reflect policymakers’ concerns about the pressure on foreign exchange reserves amid higher oil prices linked to the war, the report added.

The analysis also noted that India, as a major oil importer, has faced pressure on its currency. It suggested that the central bank may be prioritising more liquid foreign currency assets as part of its reserve management strategy amid pressure on the Indian rupee.

On Wednesday, the value of the Indian rupee was 95.7 against the United States dollar. It was valued at 91 against the dollar when the conflict began on February 28.

According to official data cited in the Bloomberg analysis, the RBI held 880.5 metric tonnes of gold by the end of March, with 77% now stored domestically, up from 66% six months ago.

On Wednesday, the government’s Press Information Bureau rejected the Bloomberg report, describing the claim as “fake”.

The agency said that the claim was false and cited central bank’s data showing that the share of gold in India’s foreign exchange reserves had risen to 16.7% on March 31 from 13.9% at the end of September. It had risen further to 16.8% as of May 22.

The government said that the physical stock of gold is disclosed by the Reserve Bank in its monthly bulletin and that the latest numbers were unchanged.

The Reserve Bank said on Wednesday that the report was not correct. The bank said that it had stated in its latest monthly bulletin that the physical stock of gold was unchanged at 880.5 tonnes.

However, the data was till April 24, while the Bloomberg report had said that the gold reserves may have fallen in the two weeks till May 22.

Edited by Nachiket Deuskar.