MUMBAI: India's total foreign exchange reserves touched $360 billion by end March 2016, up by $18 billion over the previous year's levels, data from the Reserve Bank of India showed. The reserves include non-dollar currencies and their revaluation impact against the dollar. Hard dollar mop-up by the central bank through currency market intervention was only $10.2 billion in the year.
"This in part is due to central bank having to draw upon the reserves buffer to contain rupee volatility and slow the unit's one-sided descent in times of extreme external volatility," said Radhika Rao, chief India economist at DBS.
"A case in point was Feb 16, when the rupee was edging close to a record low against the dollar on the back of plunge in global crude and commodity prices. Besides, the slowdown in China's economy and domestic fiscal concerns were added concerns."
At 67 to the dollar, the rupee is still close to its September 2013 levels which forced the central bank to come out with a special scheme of FCNR(B) dollars to raise $25 billion to shore up the rupee.
The $25 in FCNR(B) mop-up of September 2013 matures this September. Reserve Bank of India chief Raghuram Rajan has already said he is confident of handling any pressure on account of that.
"There could be some pressure on the currency if some of th ose deposits are not rolled over (as terms are less attractive)," said an economist.
"But it may not morph into acute pressure on the domestic markets."
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