Gold Silver Reports (GSR) – India’s Forex Reserves Hit a New High — RBI data showed the reserves rose $1.2 billion in the week to March 23. The improved overseas dollar inflows in March reversing February’s trend of outflows has helped accumulation of reserves, forex dealers said.
India’s foreign currency reserves hit a new high at $422.5 billion last week, which is good enough to cover 10 months of imports. The previous peak was $421.9 billion seen on February 2.
RBI does not provide reasons behind rise or fall in reserves.
According to NSDL data, overseas investors pumped in a net ₹2,662 crore in local debt and equities in March so far. February saw a net outflow of ₹11,288 crore.
“A stronger capital account led to higher accretion of forex reserves,” said CARE Ratings.
A research note from DBS Bank said the rise in reserves helped India’s import coverage ratio to a comfortable ten times in FY18 (reserves minus gold holdings) against sub-seven times in 2012-13, but it is below the recent peak of about 10.5-11times in the past two years.
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“Compared to Q3 2013 lows that is taper tantrum, India’s reserves stock has risen by the most compared to its other Asian peers,” DBS said. However, India’s high external liability which rose to 20% of GDP remains a concern. Total external debt touched a record high of $496 billion in September 2017 compared with $472 billion in March 2017 and $405 billion in June 2013. – Neal Bhai Reports (NBR) INDIA
