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India's forex reserves surpasses USD 600 bn mark after nearly four months

Reserve Bank Governor Shaktikanta Das, in the December bi-monthly monetary policy unveiled today, said India's forex reserves increased to USD 604 billion as on December 1. He said the Indian rupee has exhibited low volatility compared to emerging market economy (EME) peers in 2023.

India's forex reserves surpasses USD 600 bn mark after nearly four months
India's forex reserves surpasses USD 600 bn mark after nearly four months

By PTI

Published : Dec 8, 2023, 12:55 PM IST

Updated : Dec 8, 2023, 1:01 PM IST

Mumbai : India's foreign exchange reserves increased to USD 604 billion as on December 1, surpassing the USD 600 billion mark after a gap of about four months. The forex reserves were last above the USD 600 billion mark on August 11 this year.

"India's foreign exchange reserves stood at USD 604 billion as on December 1, 2023. We remain confident of meeting our external financing requirements comfortably," Reserve Bank Governor Shaktikanta Das said, while unveiling the December bi-monthly monetary policy on Friday. The reserves were USD 597.935 billion in the preceding week ended November 24.

In October 2021, the country's foreign exchange kitty had reached an all-time high of USD 642 billion. The reserves took a hit as the central bank deployed the reserves to defend the rupee amid pressures caused majorly by global developments since last year.

The governor further said the Indian rupee has exhibited low volatility compared to emerging market economy (EME) peers in the calendar year 2023, despite elevated US treasury yields and a stronger US dollar. "The relative stability of the Indian rupee reflects the improving macroeconomic fundamentals of the Indian economy and its resilience in the face of formidable global tsunamis," he said.

The coefficient of variation for the daily INR exchange rate vis--vis the US dollar was 0.66 (CY 2023), which is the lowest among peer emerging economies, including China, Malaysia, Russia, Turkey, Vietnam, South Africa and Thailand. On the financing side, Das said foreign portfolio investment (FPI) flows have seen a significant turnaround in 2023-24 with net FPI inflows of USD 24.9 billion (up to December 6) as against net outflows in the preceding two years.

Net foreign direct investment (FDI), on the other hand, moderated to USD 10.4 billion in April-October 2023, from USD 20.8 billion a year ago. Net inflows under external commercial borrowings (ECBs) and non-resident deposit accounts are much higher than last year. India's external vulnerability indicators exhibit higher resilience in comparison with EME peers.

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