India beats Russia to no.4 spot on forex kitty rankings
The forex reserve rises when the RBI buys dollars to prevent a sharp appreciation of the domestic currency. The rupee had come under pressure on February 26 following a surge in government bond yields worldwide, closing 104 paise lower.
By TNN | Updated:
Agencies
MUMBAI: India overtook Russia to become the nation with the fourth-largest foreign exchange reserve despite a drop in its international investments in dollar terms.
While India’s forex holdings fell by $4.3 billion to $580.3 billion as of March 5, Russia’s drop was even sharper, resulting in its numbers coming down to $580.1 billion according to data from Bloomberg. According to data released by the RBI on Friday, after rising by $689 million during the last week of February to a record $584.5 billion, the central bank’s foreign holdings fell in the first week of March.
The forex reserve rises when the RBI buys dollars to prevent a sharp appreciation of the domestic currency. The rupee had come under pressure on February 26 following a surge in government bond yields worldwide, closing 104 paise lower. When the currency comes under pressure, the RBI ends up selling its forex reserve to defend the rupee.
A high forex reserve gives the RBI more leeway in maintaining monetary policy. According to a report by ICICI Securities, the RBI has added $130 billion in forex reserves (spot and forward markets) in the last 12 months and part of these can be spent to ensure stability in forex and interest rate markets.
While India’s forex holdings fell by $4.3 billion to $580.3 billion as of March 5, Russia’s drop was even sharper, resulting in its numbers coming down to $580.1 billion according to data from Bloomberg. According to data released by the RBI on Friday, after rising by $689 million during the last week of February to a record $584.5 billion, the central bank’s foreign holdings fell in the first week of March.
The forex reserve rises when the RBI buys dollars to prevent a sharp appreciation of the domestic currency. The rupee had come under pressure on February 26 following a surge in government bond yields worldwide, closing 104 paise lower. When the currency comes under pressure, the RBI ends up selling its forex reserve to defend the rupee.
A high forex reserve gives the RBI more leeway in maintaining monetary policy. According to a report by ICICI Securities, the RBI has added $130 billion in forex reserves (spot and forward markets) in the last 12 months and part of these can be spent to ensure stability in forex and interest rate markets.
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