Indian Rupee Weakens; Asset Management Institutions Restrict New Inflows into Gold ETFs

As India's key festival season of strong gold demand approaches, domestic asset management institutions are restricting new investments in gold products. The Indian rupee has suffered a historic decline, and the country is taking multiple measures to reduce public demand for precious metals, with asset managers' actions further supporting related policies. Most fund managers, including leading institutions SBI Funds Management and ICICI Prudential Asset Management, announced through separate notices on Thursday evening that they would impose subscription restrictions on certain gold ETFs and related products, with the new rules taking effect on Friday. The institutions did not specify the reasons for the restrictions, but people familiar with the matter said the move stemmed from discussions among several asset management companies and aimed to temporarily limit new investments in gold funds. The people, who declined to be named, said the industry hopes to guard against an explosion in gold demand ahead of the festival season, while policymakers are focusing on controlling gold imports. The Association of Mutual Funds in India and the market regulator Securities and Exchange Board of India did not immediately respond to emailed requests for comment.