The forex reserves of India are on a steady fall over the few months, on back of possible intervention by the RBI to stem rupee’s slide and also due to capital outflows from the bond market. The foreign exchange reserves have reached $405.14 billion as on July 20, a decline of $19.40 billion from the March 30 figure of 424.36 billion. The reserves have fallen by $20.94 billion from the highest value of $426.08 billion on April 13.
However, the forex analysts are of the view that the fall is not a cause of concern. “India has adequate reserves to meet its liabilities and so there is no cause of worry. Also, I feel that the decline is on account of RBI’s intervention in the forex market to control volatility and that is a prudent measure,” said D K Joshi, chief economist at Crisil.
The country’s short-term external debt as a percentage of total external debt has remained broadly stable over the past few years, according to the CRISIL report. The stability has been accompanied by India’s improving ability to service short-term debt obligations, it said.
Meanwhile, with the demand for extending the market timings for a segments like currency futures and over- the-counter forex markets gaining currency, the Reserve Bank yesterday said it will set up a committee to review the same.
Deputy governor Viral Acharya said with increased global integration of the domestic markets, it is increasingly being discussed that market timings may be reviewed to facilitate better and quicker pricing of global developments.
“It has been proposed to set up an internal working group that will comprehensively review the timings of various markets that are under the purview of the RBI, and assess the necessary payment and settlement infrastructure that can support a co-ordinated timings across these markets,” Acharya told reporters during the post-policy presser yesterday.