India's foreign exchange reserves hit a new peak of US$ 615.5 billion
- IBEF
- June 10, 2024
India’s foreign exchange reserves increased by US$ 4.83 billion, reaching a historic high of US$ 651.5 billion as of May 31, 2024, according to Reserve Bank of India (RBI) Governor Mr. Shaktikanta Das in his recent monetary policy statement. On May 24, the country’s forex reserves were reported at US$ 646.6 billion. He expressed confidence in the central bank’s ability to meet the country’s external financing requirements comfortably. During the post-policy press conference, he also addressed concerns regarding inflows from JP Morgan’s bond index inclusion, assuring that the central bank is well-prepared to handle them, stating, “The RBI has several instruments. We have managed it in the past and will also manage it this time. No worries on that score.” Due to the inclusion, an estimated US$ 25 billion passive inflow is expected into the government bond market.
He highlighted in his statement that in 2023, India retained its position as the most attractive destination for greenfield foreign direct investment (FDI) in Asia-Pacific. While gross FDI remained robust in 2023-24, net FDI moderated. Additionally, external commercial borrowings (ECBs) and non-resident deposits recorded higher net inflows than the previous year. Foreign portfolio investment (FPI) flows surged in 2023-24, with net FPI inflows reaching US$ 41.6 billion. However, since the beginning of 2024-25, foreign portfolio investors have turned net sellers in the domestic market, resulting in net outflows of US$ 5.0 billion as of June 5. In September 2023, JP Morgan announced the inclusion of government papers issued by the RBI under the Fully Accessible Route (FAR) in its widely tracked GBI-EM. The inclusion process will start on June 28 and be phased over ten months, with a 1% weight added each month until March 31, 2025.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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