India's foreign exchange reserves fell by $1.2 billion during the week-ended September 23, 2005.
Expressing concerns over low returns from over $178 billion forex reserves of India, World Bank has recommended that a part of these funds should be utilised in the high-return infrastructure sector.
In the second consecutive week of an increase in the kitty, India's forex reserves have grown by $2.54 billion to $547.25 billion for the week ended November 18, the RBI said on Friday. In the previous reporting week, the overall kitty had swelled by $14.72 billion in the highest weekly rise since August 2021 to $544.71 billion. It can be noted that in October 2021, the country's forex kitty had reached an all-time high of $645 billion.
Foreign currency assets were down $1.516 billion to $131.426 billion. While gold reserves increased $77 million to $4.453 billion, SDRs were unchanged at $4 million.
India's forex kitty jumped by $10.47 billion to $636.09 billion for the week ended March 8, the Reserve Bank said on Friday. In the previous reporting week, the overall reserves had risen by $6.55 billion to $625.63 billion. In October 2021, the country's forex kitty had reached an all-time high of $645 billion.
The rise in reserves was $2.12 billion.
Accretion to India's foreign exchange reserves showed a lower growth of $6.6 billion in the first half ended September 2004, against a rise of $16.2 billion in April-September 2003.
The apex bank held 586.44 tonne of gold as on September 30, of which 294.14 tonne are held overseas in safe custody with the Bank of England and the Bank for International Settlements, while the remaining gold is held domestically
Surging forex reserves, now over $108 billion, have put 'considerable' pressure on the Reserve Bank of India, which finds the existing money control instruments inadequate to manage the capital inflows, according to PNB Gilts.
'Investors can consider staying invested in long duration products as there is a possibility of rate cuts in the near term.' Positive macros - lower inflation, high forex reserves and favourable demand-supply dynamics for government bonds - make a strong case for rate cuts from December, says Devang Shah, head of fixed income, Axis Mutual Fund. In an interview with Abhishek Kumar in Mumbai, Shah says this view may not hold true if commodity prices go up sharply.
'Many global investors have been overweight on dollar assets, so some diversification or hedging is naturally expected.'
Foreign exchange reserves increased $2.146 billion to $139.352 billion for the week ended January 6, according to the weekly supplement released by the Reserve Bank of India.
Reserves provide a cushion against shocks.
The central bank may be permitted to lend to the oil companies through authorised dealers in foreign exchange at a cheaper rate of say 4.5-5 per cent. The oil companies can meet their import payment commitments in the foreign currency borrowed from RBI.
China keeps most of its foreign reserves in the United States Government securities.
Lower international interest rates during June-July 2002-03 led to a sharp fall in returns on India's foreign currency assets to 2.8 per cent compared to 4.1 per cent during FY02 while that on gold reserves it fell to 0.6 per cent from 0.9 per cent.
The Reserve Bank of India (RBI) has extended the trading hours for the interbank call money market from July 1, and that of repo and tri-party repo markets from August 1. Market participants said the decision is intended to help reduce the large Standing Deposit Facility (SDF) balances held by banks with the RBI, thereby addressing liquidity mismatches.
A combination of factors, including heavy investments in US Treasury bonds and dollar sales at a healthy profit, facilitated the Indian central bank in transferring a record surplus of Rs 2.11 trillion to the government for 2023-24 (FY24). The RBI's dollar purchases increased in FY24, supported by robust capital inflows endorsing the economy's health.
India's foreign exchange reserves increased $2.95 billion to $645.58 billion for the week ended March 29, the Reserve Bank of India (RBI) said on Friday. This is the sixth consecutive week of a jump in overall reserves. The kitty had increased $140 million to $642.63 billion in the previous reporting week.
The recent depreciation of the rupee along with sharp fall in the country's foreign exchange (FX) reserves has sparked a debate whether stability of the exchange rate is necessary and desirable. The rupee was one of the least volatile currencies among peers for almost two years before the current downward pressure started in September after the US Federal Reserve lowered interest rate.
The rupee has depreciated 9.7 per cent against the US dollar over a year and with the RBI stemming the rupee's weakness through dollar sales, its reserves have dropped to their lowest levels since October, 2020. The fall in reserves has widespread implications.
'India has the potential to grow at more than 7%, with the monetary policy providing a supportive hand.'
'If it doesn't, it will continue with measures to infuse liquidity, signalling a new cycle,' predicts Tamal Bandyopadhyay.
According to Subbarao, the lower your reserves dip, the more vulnerable you become.
Dropping for the second straight week, India's foreign exchange reserves plummeted by a hefty $3.20 billion at $284.65 billion on a heavy decline in the currency assets, the Reserve Bank said.
The Enforcement Directorate (ED) on Wednesday searched locations in Karnataka, including educational institutions linked to state Home Minister G Parameshwara, as part of a probe into alleged gold smuggling-linked money laundering case against Kannada actor Ranya Rao and others. The ED sources said an educational trust is suspected to have "diverted" funds and made a payment of Rs 40 lakh towards the credit card bill of Rao, allegedly on the instructions of an influential individual. The sources claimed the trust is linked to Parameshwara and the "influential" individual is a politically exposed person. The searches found there were no supporting vouchers or documentation to "substantiate" this payment (for credit card bill payment), they said.
During the reporting week, gold reserves increased marginally by $87 million to $26.796 billion.
Trading in the forex market was impacted on Friday as one of the platforms suffered an outage. One of the electronic trading platforms suffered an outage around midday during the trading hours due to which players were unable to log into the system, according to sources. Orders dried up as a result of this, they said, adding that this created a heightened uncertainty in the forex market, causing excess volatility in the Indian rupee, which was avoidable.
While this will incur a revenue loss amounting to 0.2 per cent of GDP, it will provide a strong boost to consumer sentiment and spending, points out Rajani Sinha.
During the week, gold reserves declined by $443 million to $26.910 billion.
All components showed improvement with the exception of FDI and banking capital in the first half of 2010-11.
'A repo cut will be very good for the market as it will mean that everything is being done to spur growth in these uncertain times.'
The overall reserves had jumped by $7.2 billion to $595.98 billion for the previous reporting week. It can be noted that in October 2021, the country's forex kitty had reached an all-time high of $645 billion.
After a robust 2023, foreign investors significantly scaled back their investments in Indian equities in 2024, with net inflows amounting to over Rs 5,000 crore, as elevated domestic valuations, coupled with geopolitical uncertainties prompted investors to adopt a more cautious stance. Looking ahead to 2025, FPI flows into Indian equities could see a recovery, supported by a cyclical upswing in corporate earnings, particularly in domestic-oriented sectors like capital goods, manufacturing, and infrastructure, Vinit Bolinjkar, head of research, Ventura Securities, said.
Foreign exchange reserve, often taken as a yardstick to gauge a country's financial strength, are the foreign currency deposits and bonds held by central banks or monetary authorities (it is Reserve Bank in case of India).
Forex reserves include a country's gold holdings and convertible foreign currencies held in its banks, including special drawing rights and exchange reserve balances, with the International Monetary Fund.
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