"This should make the rupee less vulnerable to shifts in global investor sentiment," it said in a report released on Wednesday.
Preliminary balance of payments data published on Monday showed that the current account deficit fell to $5.2 billion in the July-September quarter of 2013-14, or 1.2 per cent of gross domestic product.
"The decrease was due to a pick-up in exports and a slump in gold imports, it noted.
Gold imports have risen substantially over the past decade from $5 billion in 2003 to over $50 billion in 2012, it said.
"India's affinity for gold is partly cultural but a desire to hedge against inflation has also played a role," the report said.
The decline in gold imports was the result of policy changes, such as a requirement to re-export 20 per cent of imported gold and a doubling of import duty, that were introduced to make India less vulnerable to any shift in foreigners' willingness to fund India's deficit spending.
"These moves, so far anyway, have proved extremely successful," it said.
Thanks to weaker gold demand, India was able to accommodate
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