India’s foreign exchange reserves have witnessed a notable upswing, reaching $604 billion as of December 1, marking a significant milestone after a four-month hiatus. The last instance of the reserves crossing the $600 billion threshold was recorded on August 11 earlier this year.
In his recent monetary policy statement, RBI Governor Shaktikanta Das highlighted a crucial development—the issuance of the master direction for foreign exchange market participants. This initiative is part of a comprehensive strategy aimed at assisting market participants in effectively managing risks within the dynamic foreign exchange market.
As of November 24, the forex reserves stood at $597.935 billion, reflecting a steady increase from the preceding week. Notably, in October 2021, India’s foreign exchange reserves had reached an unprecedented all-time high of $642 billion. However, the subsequent months witnessed a decline as the central bank strategically deployed reserves to defend the Indian rupee against pressures arising from global developments.
Governor Das emphasized the resilience of the Indian rupee, citing its low volatility in comparison to emerging market economy (EME) peers throughout the calendar year 2023. This stability is noteworthy, especially considering the backdrop of elevated US treasury yields and a stronger US dollar.
Q: What is the current status of India’s foreign exchange reserves?
A: As of December 1, India’s foreign exchange reserves have surpassed $600 billion, marking a resurgence after a four-month period.
Q: When was the last time India’s reserves crossed the $600 billion mark?
A: The reserves were last above $600 billion on August 11 this year.
Q: What measures has the RBI taken to assist forex market participants?
A: RBI Governor Shaktikanta Das highlighted the issuance of a master direction for foreign exchange market participants, forming part of a comprehensive strategy to manage risks.
Q: How did India’s forex reserves perform in the preceding week?
A: In the week ending November 24, the reserves were reported at $597.935 billion, indicating a noticeable increase from the previous week.
Q: Why did the reserves experience a dip in recent months?
A: The reserves took a hit as the central bank deployed them to defend the rupee amid global pressures caused by major developments since last year.
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