Rs 2,000 note withdrawal may not impact gold demand, rupee value: Expert

CHENNAI: The decision of the Reserve Bank of India (RBI) to withdraw Rs 2,000 denomination banknotes from circulation will not have any major impact on gold demand and also on the rupee value, an expert said on Saturday.

According to the expert, the number of Rs 2,000 denomination notes in circulation (or stocked in lockers) is not huge.

"The number of Rs 2,000 currency notes in circulation is not large. This is not like demonetisation of Rs 500 and Rs 1,000 currency notes that happened in 2016," Hareesh V., Head of Commodities Research, Geojit Financial Services told IANS.

According to Hareesh, there are other investment avenues and further, there is a limit for using hard cash to purchase gold.

"The RBI decision will also not have any bearing on the gold/silver futures," he said.

The RBI on Friday said Rs 2,000 denomination notes to the value of Rs 3.62 lakh crore were in circulation on March 31, 2023.

Hareesh said even if people decide to convert their Rs 2,000 into US dollars, there will not be any major impact on the value of the Indian rupee.

"As witnessed during demonetisation, we expect the deposit accretion of banks could improve marginally in the near term. This will ease the pressure on deposit rate hikes and could also result in moderation in short-term interest rates," Karthik Srinivasan, Senior Vice President Financial Sector Ratings, ICRA said.