India’s foreign exchange reserves rose by $11.02 billion in the week ended Dec. 2 as the central bank accumulated nearly $8 billion that flowed in the form of the ECB from businesses as well as portfolio flows in addition to some valuation gains relative to non-dollar-denominated assets. in the reserves.
Foreign exchange reserves, including gold and SDRs, stood at $561.16 billion as of December 2, up $11.02 billion from levels a week earlier. In terms of rupees, this is approximately Rs 68,809 crore. After making other arrangements, the central bank released Rs 67,397 crore of rupee liquidity during the week, according to RBI data.
At current levels, reserves are sufficient to cover about nine months of projected imports for 2022-23, but are still about $81 billion below the peak of $642 billion in September 2021. Currency analysts say that part of the recent stack-up could also be due to some expiring futures contracts resulting in some spot dollar liquidity. The Reserve Bank announced various measures to improve foreign exchange inflows on July 6, 2022 after losing more than $50 billion from a peak of $642 billion in October 2021. These included easing commercial borrowing external and NRI filing standards. After the measures, deals with the ECB were reached for $8.6 billion, RBI Governor Shaktikanta Das said in his monetary policy statement on Wednesday.
However, there could be pressure on reserves as India’s current account deficit is expected to remain large given the slowdown in exports due to the global slowdown. But resilient services exports are likely to provide some cushion. Additionally, growth capital could continue to drive India out as global companies seek to diversify their sources of supply and India presents an attractive long-term opportunity, according to a recent report from the global investment bank. Goldman Sachs.
