RBI buys $19.1b forex forwards in May to shore up reserves

Tags: News
The Reserve Bank will continue to shore up its forex kitty after having bought $ 19.1 billion of short-term forwards in May following improvement in investor confidence post Narendra Modi-led BJP's victory in the general elections, a report said today.

RBI will continue to purchase when the rupee trades at 58-60 against the US dollar, said the Bank of America-Merrill Lynch report.

BofA-ML India chief economist Indranil Sen Gupta said RBI will recoup forex when the rupee is around 58-60/$.

He noted that shoring up the forex cover is needed as the import cover has halved to about eight months, a level not seen since 2008. And for the RBI to maintain this level of forex cover it has to accrue $ 14.5 billion annually.

Quoting the just-released SDDS data from the IMF which showed the RBI bought $ 19.1 billion of short-term forwards in May, Gupta said: "We grow more confident of our call that Governor Raghuram Rajan will recoup forex to build the 'bullet-proof national balance sheet' he had talked of earlier".

According to the IMF's SDDS data, RBI bought $ 19.1 billion of short-term forwards in May reaping the advantage of improved investor confidence after the Modi win.

This brought down the net outstanding forward forex sales to $ 11.4 billion from $ 32 billion at end April. The bulk of these short-term long forward positions will mature in the second half of the current fiscal.

As per the latest RBI data, the forex reserves rose $ 1.385 billion to $ 314.92 billon, close its record high of $ 320 billion in September 2011.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Kejriwal will do well to ignore the bickering and get on with work

    Psychologists explain implosion as a form of behaviour involving intensive recollection and review of anxiety-producing situations or events in an att

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Today's Columns

Simon J Evenett

Are you keeping an eye on BRIC reforms?

When the history of state action during the crisis era ...

Kuruvilla Pandikattu SJ

How do we explain pain and passion?

The holy week that the christians celebrate this week recalls ...

Shona Adhikari

Anjolie Ela Menon, the storyteller, is back

Anjolie Ela Menon, one of India’s most celebrated artists, is ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture