FACTBOX - Asian central banks take divergent views on gold

Gold necklaces are seen on display at a jewellery shop in Hyderabad in this June 30, 2009 file photo.

Reuters - The International Monetary Fund has sold 200 tonnes of gold to the Reserve Bank of India for $6.7 billion, quietly executing half of a long-planned bullion sale that has threatened to slow gold's ascent.

The sale, which surprised traders who expected China to be the leading buyer, will relieve the gold market of some uncertainty over how and when the IMF would sell 403.3 tonnes of gold, about one-eighth of its total stock.

The following Asian countries have been pondering whether to boost gold as a percentage of their overall reserves.

CHINA

China disclosed on April 24 that it had increased its holdings of gold to 1,054 tonnes from 600 tonnes since 2003. Researchers with the ruling Communist Party have said that China should buy more gold to boost its holdings. China's foreign exchange reserves have grown so fast over the years that gold's share as a percentage of the reserves has shrunk.

However, a debate is swirling in China about how the country can reduce its exposure to the dollar and to U.S. assets in case America's ultra-loose fiscal and monetary policy rekindles inflation and erodes the value of the dollar and U.S. Treasuries.

INDIA

Although India is the world's biggest consumer of gold, primarily in the form of jewellery and investment among its billion-plus people, its central bank had given few indications of being a front-runner in the move to diversify into bullion.

The proportion of gold as part of its total foreign reserves had fallen over the past decades. India's foreign exchange reserves held at the central bank totalled $285.5 billion on Oct. 23, of which gold comprised just over $10 billion.

The latest purchase will lift its share of gold holdings from near 4 percent to about 6 percent, much less than most of the developed world but four times China's share.

SOUTH KOREA

South Korea's central bank holds almost no gold, with just 0.03 percent of its total foreign reserves, the sixth largest in the world, in the metal. During an annual parliamentary audit last month, a few members of parliament in fact proposed the Bank of Korea consider expanding gold purchases.

But its governor, Lee Seong-tae, said it won't be possible for the central bank to sell or buy hold by a large amount without having a market impact.

TAIWAN

Taiwan's central bank is studying whether to increase the amount of gold in its forex reserves. Taiwan's foreign exchange reserves, which rank behind China and Japan in Asia, rose to a record high of $332.2 billion at the end of September, mainly due to the euro and yen appreciating against the U.S. dollar.

The figure that the central bank announced does not include gold. In October 2006, the central bank said the island had $10.1 billion of gold in its reserves.

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