Fri. Mar 29th, 2024
foreign exchange reserves

India’s foreign-exchange reserves have crossed Russia position to become the world’s fourth-largest, as the South Asian nation’s central bank continues to hoard dollars to mitigate the adverse effects of any sudden outflows.

It is observed that after months of rapid increase, Reserves for both countries have been flattened out. India’s growth Russia as their holdings declined rapidly in recent weeks.
The numbers as of March 5, shows that India’s forex reserves holdings reached $580.3 billion, nosing out Russia’s $580.1 billion accumulation, said the Reserve Bank of India on Friday.

China ranks the highest, followed by Japan and Switzerland on the International Monetary Fund table.

Foreign Exchange Reserves of India, having enough to cover estimate 18 months of imports, is supported by certain factors like rare current-account surplus, rising inflows into the local stock market and foreign direct investment.

Analysts believe that a strong foreign exchange reserves position provides foreign investors and credit rating companies an additional easement. Owing to this, the government can meet its debt obligations despite the progressively worsen fiscal outlook.

Quoting the report published in NDTV, before the data was in the public domain, Kaushik Das, Chief India Economist at Deutsche Bank shared his insights saying, “India’s various reserves adequacy metrics have improved significantly, particularly in the last few years. The healthy Forex reserves position should give enough comfort to RBI for dealing with any potential external shock-driven capital-stop or outflows in the period ahead.”

The Apex monetary institution of India data shows that the previous year, in the spot forex market, Reserve Bank of India (RBI) bought a net $88 billion. This step made the rupee a weak and the worst performer among Asia’s major currencies and put India on a U.S. Treasury watchlist for currency manipulation.

RBI Governor Shaktikanta Das has said that amidst emerging market, public sector banks need to build reserves to prevent any external shocks, irrespective of being put on watch by the United States.

By Harshita Sharma

I bring to you updates from business, policy and economy spectrum.