India's Forex Reserves Surpasses $600 Billion Mark After Nearly Four Months

India's foreign exchange reserves increased to $604 billion as on Dec. 1, surpassing the $600 billion mark after a gap of about four months.

The forex reserves were last above the $600 billion mark on Aug. 11 this year.

"India's foreign exchange reserves stood at $604 billion as on Dec. 1, 2023. We remain confident of meeting our external financing requirements comfortably," Reserve Bank Governor Shaktikanta Das said, while unveiling the December bi-monthly monetary policy on Friday.

The reserves were $597.935 billion in the preceding week ended Nov. 24.

In October 2021, the country's foreign exchange kitty had reached an all-time high of $642 billion. The reserves took a hit as the central bank deployed the reserves to defend the rupee amid pressures caused majorly by global developments since last year.

The governor further said the Indian rupee has exhibited low volatility compared to emerging market economy peers in the calendar year 2023, despite elevated U.S. treasury yields and a stronger U.S. dollar.

"The relative stability of the Indian rupee reflects the improving macroeconomic fundamentals of the Indian economy and its resilience in the face of formidable global tsunamis,' he said.

The coefficient of variation for the daily INR exchange rate vis-à-vis the U.S. dollar was 0.66 (CY 2023), which is the lowest among peer emerging economies, including China, Malaysia, Russia, Turkey, Vietnam, South Africa and Thailand.

On the financing side, Das said foreign portfolio investment flows have seen a significant turnaround in 2023-24 with net FPI inflows of $24.9 billion (up to Dec. 6) as against net outflows in the preceding two years.

Net foreign direct investment, on the other hand, moderated to $10.4 billion in April-October 2023, from $20.8 billion a year ago.

Net inflows under external commercial borrowings and non-resident deposit accounts are much higher than last year.

India's external vulnerability indicators exhibit higher resilience in comparison with EME peers.