 "RBI bought forex worth $3.8 bn in Apr-June")
The Reserve Bank of India (RBI) bought foreign currency worth $3.8 billion, on net basis, in April-June 2016 to shore up foreign exchange reserves.
June saw a sharp rise in net purchases at $1.9 billion against a subdued activity in May 2016 when it bought just $554 million, according to RBI data. According to data in the monthly bulletin (August 2016) the central bank had bought foreign currency resources worth $10.28 billion in the previous financial year (2015-16).
RBI in its third bi-monthly monetary policy review for 2016-17 said the pace of foreign direct investment inflows slowed in the first two months of 2016-17.
Meanwhile, flows into deposits kept by non-resident Indians (NRIs) with banks dipped sharply in April-June 2016 period to $1.3 billion from $5.8 billion in the year-ago period. The pool of outstanding deposits was $126.18 billion at the end of June 2016. The amounts in FCNR-B stood at $45.07 billion, NRE accounts stood at $71.14 billion and those in NRO accounts was $9.96 billion, RBI said.
Substantial amount of deposits from FCNR-B pool would get redeemed after September on maturity of three-year tenure.
Assuaging fears over adverse effect of outflows from FCNR-B deposits on maturity, RBI Governor Raghuram Rajan said the central bank has signed forward contracts for 80 per cent of dollar requirements to meet obligations. It also has ample reserves to curb excess volatility in the market.
Banks had raised nearly $34 billion between September and November 2013, out of which $27 billion was through FCNR (B) deposits, maturing mostly in three years. Banks, then, swapped those dollars with the RBI. The central bank readied itself by buying forwards dollar.These foreign exchanges resources were raised in 2013 to bolster India's foreign exchange reserves and also contain the volatility of rupee then. The swaps and the forwards will take care of the dollar requirement and should be neutral for the reserves.
June saw a sharp rise in net purchases at $1.9 billion against a subdued activity in May 2016 when it bought just $554 million, according to RBI data. According to data in the monthly bulletin (August 2016) the central bank had bought foreign currency resources worth $10.28 billion in the previous financial year (2015-16).
RBI in its third bi-monthly monetary policy review for 2016-17 said the pace of foreign direct investment inflows slowed in the first two months of 2016-17.
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Yet, the net portfolio flows were stronger after the Brexit vote, notwithstanding considerable volatility characterising these flows. The level of foreign exchange reserves rose to $365.7 billion by August 5, 2016.
Meanwhile, flows into deposits kept by non-resident Indians (NRIs) with banks dipped sharply in April-June 2016 period to $1.3 billion from $5.8 billion in the year-ago period. The pool of outstanding deposits was $126.18 billion at the end of June 2016. The amounts in FCNR-B stood at $45.07 billion, NRE accounts stood at $71.14 billion and those in NRO accounts was $9.96 billion, RBI said.
Substantial amount of deposits from FCNR-B pool would get redeemed after September on maturity of three-year tenure.
Assuaging fears over adverse effect of outflows from FCNR-B deposits on maturity, RBI Governor Raghuram Rajan said the central bank has signed forward contracts for 80 per cent of dollar requirements to meet obligations. It also has ample reserves to curb excess volatility in the market.
Banks had raised nearly $34 billion between September and November 2013, out of which $27 billion was through FCNR (B) deposits, maturing mostly in three years. Banks, then, swapped those dollars with the RBI. The central bank readied itself by buying forwards dollar.These foreign exchanges resources were raised in 2013 to bolster India's foreign exchange reserves and also contain the volatility of rupee then. The swaps and the forwards will take care of the dollar requirement and should be neutral for the reserves.