We recognise the price risk on the gold holdings and have considered the use of gold options and futures to hedge our risk. However, the RBI Act in its present form does not have enabling BIS Review 76/1997  -6-  provisions.
There is also a view that exemption notification by the Government would be required under Section 27 of the Forward Contracts (Regulations) Act to enable the RBI to enter into gold - currency swaps. Second, the RBI had played an active part in the local bullion market.