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AVOIDING ANOTHER CRISIS

Facing an unprecedented crisis, India has ratcheted up its forex reserves like never before

Rupee-RBI-Forex
REUTERS/Mukesh Gupta
Piling up.
  • Prathamesh Mulye
By Prathamesh Mulye

Writer, banking and economy

The Indian economy is going through one of its worse phases in living memory. Yet, not all is lost.

The country’s foreign exchange reserves are at an all-time high of over $500 billion (Rs37.92 lakh crore), according to data released by India’s central bank on June 12.

The strong forex pool provides stability in today’s grim economic conditions. “There is of course a cost to having very high FX reserves (it earns low returns), but that cost needs to be weighed against the aspect of financial stability that it provides,” said Arvind Chari, head-fixed income and alternatives, Quantum Advisors.

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