The Development Bank of Singapore (DBS) stated that India`s foreign reserves continue to reach record highs, touching $393 billon."Strong year-to-
The Development Bank of Singapore (DBS) stated that India`s foreign reserves continue to reach record highs, touching $393 billon.
“Strong year-to-date foreign portfolio (USD 24 billion), net investment flows (USD 13 billion) and lower absorption due to a narrower current account deficit have led to an increase in dollar liquidity.”, according to DBS`s market report that was quoted in The Economic Times (economictimes.indiatimes.com).
The increase in India`s reserves ($100 billion) is reportedly the highest as compared to its Asian counterparts outside of Japan, as the bank said.
“If left unsterilised, these inflows will add to the rupee appreciation pressures, with the rupee already up 6 per cent so far this year, leading its BRIC (Brazil, Russia, India, China) peers.”, as the bank said.
“India’s strong reserves position is an important buffer against volatility in these uncertain times.”, said A. Prasanna, economist, ICICI Securities Primary Dealership Ltd in Mumbai, who spoke to Reuters (reuters.com).
“However, reserves are likely to see some decline in coming months due to the FCNR redemptions. Over the medium term, we expect reserves to keep expanding, boosted by sustainable inflows such as FDI (foreign direct investment).”, as he added.
Rising reserves in combination with narrower current account deficit can protect India against volatility and lower the country`s vulnerability to external risk events, concluded The Economic Times by quoting the bank`s words.