India has become the fourth largest country in the world in terms of foreign exchange reserves, leaving Russia behind. The central bank of the South Asian nation has continued to deposit dollars to protect the economy from any sudden losses. However, after a few months of increase in the foreign exchange reserves of both countries, most of the decline has been recorded this year. In recent weeks, India overtook it after Russia’s foreign exchange reserves fell sharply.
As of March 5, India’s foreign exchange reserves had risen to $ 580.3 billion. The Reserve Bank of India said on Friday that Russia has foreign exchange reserves of 580.1 billion. At the same time, China has the largest reserves, after which Japan and Switzerland are on the table of the International Monetary Fund. India’s foreign exchange reserves can cover about 18 months of imports.
Analysts say that the strong position of the foreign exchange reserves gives comfort to foreign investors and credit rating companies that the government can meet its debt obligations despite a worsening fiscal deficit and a shrinking economy for the first time in four decades. Kaushik Das, the chief economist at Duke Bank, said, “India’s various reserves have improved significantly over the years. The forex reserves will help the RBI to deal with any possible external shock in the future.”
The RBI brought in $ 88 billion from the forex market last year. This helped prevent the rupee’s worst performance among major currencies in Asia last year and placed India on the US Treasury Watchlist. On Monday, the rupee strengthened 0.1 per cent to 72.71 per dollar. In a recent report of the RBI, it has been recommended to further strengthen the foreign exchange reserves. Governor Shaktikanta Das has said that in view of the emerging market, central banks need to increase the foreign exchange reserves to prevent any external shocks.
