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Is the Indian rupee backed by gold?

By Finserv MARKETS - Aug 27,2019
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Is the Indian rupee backed by gold?

It was over 5,000 years back that money was used in its first form in Mesopotamia, and it’s been more than 300 decades since metal coins came into circulation. For over 99.2% of human development, money implied something— something which could not just emerge out of thin air and could be traced back to the quantity of valuable metals — such as gold — that one had.

In the present day, you can buy gold online. However, online gold is new, much newer against the other ways in which this precious metal has been used.

In 1971, the then U.S. President Richard Nixon ended all connections between the dollar and gold. From that point onward, the U.S. government wouldn’t recognize valuable metals as money. However, it does bank around 3,000 metric tons of reserve gold. What becomes of such gold when no value is attached to it? To understand this concept better, we first need to look at what precisely the gold standard is.

What is the gold standard?

The gold standard is a financial framework where a nation’s currency or paper money has a value which is directly connected to gold it has in its reserves. If a country has this system in practice, it agrees to exchange a prefixed amount of paper money for a certain measure of gold. The point here is to have a fixed cost for gold at which it is purchased and sold so that there can be a well-maintained balance. That fixed cost of gold is then used to determine the value of the currency.

Is gold used as a standard used now?

Gold isn’t used as a standard isn’t at present used by any administration around the world. England got away with it in 1931, while the U.S. took stopped it in 1933 while eliminating it in 1971. It has been replaced by fiat money — a term which is used to depict currency that is used by order of the government, that it acts as a currency and can be accepted as the preferred mode of payment throughout.

 

Is the Indian rupee backed by gold?

 

Not many nations hold important gold positions when contrasted with their money supplies. Even Singapore, which for the most part is viewed as having one of the healthiest accounting reports, holds 2% of its money supply in gold.

Does India back its currency with gold?

India has started having online gold as an investment method. However, online gold is a relatively new concept and does not wholly define the country’s stand on the metal, and cannot be used to entirely back the regular currency.

However, India does have gold stocked up. The Reserve Bank of India holds around 558 tons of gold as of 2018 as part of foreign exchange reserves. The valuation of this gold changes every now and then and primarily relies on the cost of gold in the market. The gold is held in Nagpur, but a piece of this is likewise held in London after Chandrashekhar Government needed to move the 47 tons of Gold there as a security for receiving a $405 million advance in Foreign Exchange.

The need of gold is defined by The RBI Act 1956, which notices the Minimum Reserve System (MRS) to the extent support paper money with gold is concerned. The MRS says that the RBI needs to hold Rs 200 crores worth of resources for back paper currency. Out of these, Rs 115 crores can be the value of gold which RBI could physically hold.

Gold, however, has turned out to be a popular means of investment. Now you can buy and sell gold online on Finserv MARKETS. The process to buy gold online on Finserv MARKETS is easy and fast, and if you need any assistant, the chatbot ‘YARA’ is there to make things simpler for you.

Conclusion

With 100 percent transparency and no hidden charges, you can be assured that your gold is in safe hands. Besides, you also get to purchase gold in sachets, which means that you do not have to shell out thousands and lakhs of rupees to buy gold online. With the elimination of intermediaries, you end up saving a lot of money as well. You can also sell the gold anytime at the market-linked price, and also get it delivered at the click of a button. You get the option to buy gold in grams or rupees — whichever suits your expenditure style the most.

With over 100 million customers across the country, Finserv MARKETS has turned out to be a popular platform to manage your financial needs. You also don’t have to worry about the authenticity of the gold you will be purchasing, as they are of 24 karats with 99.5 percent purity. They also came with an Assay certification, which is a guarantee of their quality.

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!

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