Gold or dollar? Choose.

"India remains a bright spot in an otherwise grim world economic scenario and internationalization of rupee is the natural step forward, Reserve Bank of India (RBI) Executive Director Radha Shyam Ratho said." "Such a move of internationalization of rupee can deepen our financial markets, allowing domestic firms to transact in their own currency internationally, besides mitigating exchange risks for our exporters and importers, Ratho said." DH. He is joking, we hope. Why? In the US, "In November, the Consumer Price Index (CPI) for all urban consumers increased 0.1 percent, seasonally adjusted, and rose 3.1 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy (core inflation) increased 0.3 percent in November (SA); up 4.0 percent over the year (NSA)." bls.gov. In India, CPI in October came in at 5.6% in November from 4.9% in October. TOI. Food prices increased by 8.7%. Thus, India's CPI inflation was 2.5% higher than in the US in November. Put another way, the Indian rupee bought 2.5% less than the US dollar, meaning the rupee was 2.5% weaker than the dollar. This is exemplified by consumer expectations in the US and India. "Consumers expect inflation to be at 3.4% a year from now, down from an expectation of 3.6% in October and the lowest reading since April 2021," a New York Federal Reserve Survey showed. Reuters. In India, "Median inflation expectation increased for one year horizon by 20 bps (one basis point is 0.01 percent) to 10.1% in November." One year from now, that is in the third quarter of 2024-25, the RBI predicts CPI inflation at 4.7%. ET. Consumers in the US believe that the Fed is serious about controlling rising prices while Indians have absolutely no trust in the RBI. In fact, most officials of the Federal Reserve were expecting one more rate hike in their September meeting. CNN. If that happens, the US dollar will become stronger against the rupee, making our imports more expensive and pushing inflation rate higher. At present Indians are not allowed to buy dollars so they invest in gold. "On sequential basis, gold imports surged to $7.23 billion (in October), as compared to $4.1 billion in the previous month." "According to data by the World Gold Council, gold demand in India rose 10% to 210.2 tonnes during the third quarter of the current calendar year." CNBC. Perhaps, the RBI does not trust itself. India had 800.78 tonnes of gold reserves in the third (July-September) quarter of 2023. gold.org. Buying gold ornaments is not a rational financial investment because it does not generate any return, bank lockers charge rent, the international price of gold may fall, purity, as shown by hallmarking, is dodgy (Mint), and labor costs are deducted when selling. If the rupee is internationalized Indians will rush to buy dollars, which can be held in a bank account, will pay interest and the dollar will hold its exchange value. We hope that Mr Ratho was indulging in wishful thinking. Or, was he bluffing?