After India, Sri Lanka buys 10 tonnes of IMF gold

After India, Sri Lanka has also woken up and decided to grab a bit of the International Monetary Fund gold. This was revealed by the IMF this week in a statement which said it had sold 10 tonnes of gold to Sri Lanka’s central bank for $375 million.

This was the third IMF sale of gold in a month’s time as the Washington-based institution, the world’s third-largest official holder of the precious metal, seeks to reduce its dependence on lending revenue and bolster its finances amid the global economic crisis.

The IMF said the sale to the Central Bank of Sri Lanka was based on the market prices prevailing on Monday.

On November 2, the IMF sold 200 tonnes of gold to India’s Reserve Bank for $6.7 billion, then sold two tonnes of gold to Mauritius on November 16 for $71.7 million.

The IMF, which set out two months ago to sell one-eighth of its gold reserves, is trying to complete the process as soon as possible.

IMF still has more than 200 tonnes of the precious metal to dispose of after the central banks of India and Mauritius snapped about half of the available amount. The rest will also be sold on a first-come, first-served basis.

Gold has surged this year as the dollar declines and investors seek to protect their wealth against inflation. The IMF’s executive board on September 18 approved the sale of 403.3 tonnes of bullion as part of a plan to shore up its finances and lend at reduced rates to low-income countries.

The fund is selling directly to central banks before conducting transactions on the open market.

After the sale, the IMF will remain the third-largest holder of gold after the US and Germany, according to the producer-funded World Gold Council.

The IMF will channel as much as $600 million of special drawing rights, its unit of account based on a basket of currencies that equals about $961 million, from the proceeds to subsidize loans for low-income countries.

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