Sri Lanka calls gold an 'anchor' for foreign reserves
By Mel Gunasakera (AFP) – 1 day ago
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Sri Lanka purchased 10 metric tonnes of gold from the International Monetary Fund ...nearly three weeks after buying about five tonnes as part of a move to diversify its reserves.
Earlier this month, 400 tonnes of gold by announcing it had sold almost HALF to India,
the world's biggest gold consumer,
for 6.7 billion dollars.
Mauritius has bought two tonnes for 71.7 million dollars.
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COLOMBO — Sri Lanka's central bank said Thursday gold was an "important anchor" for the country's foreign reserves after it bought more of the precious metal this week.
Sri Lanka purchased 10 metric tonnes of gold from the International Monetary Fund for about 375 million dollars on Monday, nearly three weeks after buying about five tonnes as part of a move to diversify its reserves.
"We see gold as an important anchor and a hedge to have in times of volatile currency markets. We think it's a good time to buy," the bank's governor, Nivard Cabraal, told AFP.
Gold touched 1,195 dollars an ounce in London trading on Thursday as demand rose for the metal after Sri Lanka's purchase and the greenback's fall on international markets.
Cabraal, who was attending a Singapore roadshow to promote investment in Sri Lanka following the end to the tropical island's ethnic civil war, said the country had gradually been accumulating gold for the past seven months.
"In very volatile circumstances, we need to have intrinsic value created in our portfolio. We took a decision about seven months ago to increase our gold portfolio. It has not been spectacular purchase, but a slow accumulation."
Cabraal declined to say how much the bank has in gold reserves but said the bank was happy with its reserve strategy.
"Today's prices show that we did the right thing," he said.
Earlier this month, the IMF kicked off its sale of more than 400 tonnes of gold by announcing it had sold almost half to India, the world's biggest gold consumer, for 6.7 billion dollars.
A senior Indian government official, who did not wish to be named, told AFP at the time that India's purchase of gold had been aimed at "evening out the potential for volatility in the value of the reserves."
The Washington-based institution has been selling gold as it seeks to bolster its finances amid the global economic crisis.
Mauritius has bought two tonnes for 71.7 million dollars.
Before Thursday's latest record, gold prices surged Wednesday after a newspaper report that India was mulling the purchase of more IMF gold reserves.
India's central bank has made no comment on the report.
The IMF, which currently holds roughly 3,000 tonnes of gold, is the world's third-largest official holder of the precious metal after the United States and Germany.
Gold and other commodity prices have surged in recent months amid a shift away from a sliding dollar.
The metal is also winning support on the back of fears about a climb in inflation, as gold is widely regarded as a safe store of value.
Sri Lanka received a 20-month IMF loan of 2.7 billion dollars in July after the island's reserves slumped to just over one billion dollars.
Sri Lanka's reserves had fallen to dangerously low levels as security forces pushed their final offensive against separatist Tamil Tiger rebels.
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