Forex kitty swells without March 11 delivery
Forex reserves are now at $636 bn and are expected is that it could touch $650 bn by end of FY24 as inflows at the end of March 2024 are usually higher
image for illustrative purpose
Bonds in the JPM Bond index from June 28, 2024. Equities have also shown good inflows of $5 bn in last 15 days and $2 bn since January. Debt inflows are up $6.4 bn in this year and about $1.8 bn in the last 15 days - Anil Kumar Bhansali, head (treasury) at Finrex Treasury Advisors, tells Bizz Buzz
Mumbai: Forex reserves increased by $10.470 billion without March 11th delivery. Reserves are now at $636 billion.
Defying the speculation of a section of experts that RBI will take delivery of dollars beyond March 11 thus infusing liquidity into market as a swap of $5 billion closed on March 11, the central bank has been buying dollars.
On March 11 alone, the RBI started from 82.65 and took the pair higher to 82.75. Not to mention that RBI had gone for delivery of Dollar as a swap of $5 billion for a period of 2 years in 2022 by doing a sell-buy.
RBI has been buying dollars to absorb inflows coming into the country in the last six months and has been able to take reserves from a low of $525 billion to $636 billion since October-22. In the last six months the reserves have gone up by $51 billion. The inflows have started after inclusion of Indian Govt.
Talking to Bizz Buzz, Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors, says, “Bonds in the JPM Bond index from 28th June 2024. Equities have also shown good inflows of $5 billion in last 15 days and $2 billion since January. Debt inflows are up $6.4 billion in this year and about $1.8 billion in the last 15 days.”
Overall inflows are in huge number and are getting absorbed by RBI for rainy days. Our highest reserves number was $642 billion which could be surpassed in the next week as RBI took delivery of the swap of $5 billion on March 11th. Expectation is that Reserves could touch $650 billion by end of the FY 24 as inflows at the end of March-24 are usually higher, he said.
As the Governor had recently mentioned, the RBI is also fraught with large two way flows, as in, there could be large outflows also when India looks less attractive or geopolitical developments lead to risk-averse, flight to safety type of outflows. Requesting anonymity, the treasury head of a bank said, “I think, the bar will be set high once bond inflows start.”
RBI’s intervention also achieved the twin objective of building up of warchest on the one hand and the unsterilised action led to increase in INR liquidity in the system. Rate transmission was skewed due to liquidity tightness. We get to see normalisation of the INR curve slowly, he added.
