November 3, 2009 1:13 am

IMF sells 200 tonnes of gold to India central bank

The International Monetary Fund has sold 200 metric tonnes of gold to India’s central bank, making $6.7bn which it will use to shore up its long-term finances and subsidise loans to poor countries.

India’s central bank is the first to buy from the IMF since the Fund put 403.3 tonnes of its stockpile up for sale in September.

The IMF made more money than it initially expected, selling the metal to the Reserve Bank of India gradually over the past two weeks at an average market price of around $1,045 an ounce.

It plans to sell the remaining 203.3 tonnes to other central banks or into the open market. “We don’t want to get ahead of ourselves, we still have another half to go. I hope we will still be lucky,” a senior IMF official said.

Most of the profits will go towards an endowment fund to close an income shortfall at the fund, while up to $4bn will subsidise zero-interest loans to poor countries.

Dominique Strauss-Kahn, IMF managing director, said in a statement that he “strongly welcomed” the sale. “This transaction is an important step toward achieving the objectives of the IMF’s limited gold sales program, which are to help put the fund’s finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries,” he said.

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