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India’s Forex Reserves Zooms Past $500 Billion-mark
Rupee and dollar notes (representative image)
India’s forex reserves have now crossed the $ 500 billion mark in the week ended June 12, Moneycontrol reported.
The forex reserves surging past $ 500 billion represents a remarkable turnaround for a country which in 1991 came close to defaulting on foreign debt forcing Yashwant Sinha, the then Finance Minister of Prime Minister Chandrasekhar led government, to pledge gold reserves to stay afloat.
India also faced yet another forex crisis in 2012/13 under the Manmohan Singh-led UPA government with forex reserves plunging to $259 billion, which was just enough to fund only seven months of imports and earning the country the notoriety of clubbed together as part of ‘Fragile Five’ economies of the world.
According to the data released by the Reserve Bank of India (RBI), the reserves reached $ 501.7 billion, marking an increase of $ 8.22 billion in a week. Reserves had surged $3.43 billion to a fresh all-time high of $493.48 billion in the week-ended May 29.
The forex reserves continue to register higher levels every week thanks to strong external situation of the economy due to lower trade deficit and higher capital inflows on account of foreign investment.
Shrugging off the flight witnessed in March due to pandemic induced uncertainly, India’s forex reserves has since been bolstered by continued uptick in foreign fund flows and foreign direct investment.
A combination of favourable events including share sales by promoters of Kotak Mahindra Bank and Bharti Airtel, right issues of Reliance Industries, sale of stake in Jio Platforms to a slew of foreign investors almost to the tune of 1 lakh crore is expected to further boost flows.
S&P’s decision on Wednesday reiterating India’s rating and outlook is also expected to improve global fund flows into the country.
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