BENGALURU: The country's foreign exchange reserves remain the fourth largest globally and supplemented by net forward assets, reserves provide insurance against global spillovers, said RBI Governor Shaktikanta Das.
The Reserve Bank of India (RBI) on Friday increased the policy repo rate by 50 basis points to 5.4%.
Net foreign direct investment (FDI) at $13.6 billion in Q1 FY23 was robust as compared to $11.6 billion in Q1FY22.
"Foreign portfolio investment, after remaining in exit mode during Q1:2022-23, turned positive in July 2022. Along with several other measures undertaken in July, the Reserve Bank has also used its foreign exchange reserves accumulated over the years to curb volatility in the exchange rate," Shaktikanta Das said.
In the week to July 22, foreign exchange reserves got depleted by another $1.152 billion.
India’s external sector has weathered the storm while navigating through the recent global spillovers. Merchandise exports grew in April-July 2022 while merchandise imports surged to record high on the back of elevated global commodity prices. Also, data indicate that demand for services exports, especially IT services remained buoyant in Q1 despite global uncertainty.
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Exports of travel and transport services also improved in Q1 FY23 on a year-on-year basis, the central bank said.
Speaking about rupee depreciation, the RBI governor said the depreciation of the Indian rupee is more on account of the appreciation of US dollar rather than weakness in macroeconomic fundamentals of the Indian economy.
On Friday, the rupee appreciated 46 paise to 78.94 against the US dollar. The RBI governor also said that they remain watchful and focused on maintaining stability of the Indian rupee.
"Market interventions by the RBI have helped in containing volatility and ensuring orderly movement of the rupee," he added.