Gold and our currency

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 February 2014 Dear Sirs

I have a quarry.

On every currency note there is a promise from RBI’s Governor where he promises to pay the bearer of that currency note the amount equivalent to denomination mentioned on that currency note.

We all also know that RBI will print the currency note equivalent to gold received from the Government of India .

Now take an example, ten years back when gold rate per 10 grams was Rs. 5000.00 (Approx.) which has now reached to Rs. 30000 (approx.) per 10 grams. Accordingly the actual value of one hundred rupees note which was printed 10 years back has reached to Rs. 600.00 but for bearer of that one hundred rupees note its value is rupees one hundred only after 10 years as promised by the RBI’s governor.

Now my question is where does this Rs. 500.00 (Gold rate difference) goes which is lying with RBI since last 10 years.

Thanking you

Ashok Kumar Modi

Nikhil Kaushik

Nikhil Kaushik (Expert)

23 February 2014 Dear Ashok,

The value of note is not linked to gold prices. it is only backed by gold. so the quantam of gold will reduce against 100 rupees instead of keeping the quantity static and increase the value of the currency note.

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