With foreign exchange reserves reaching $ 608.99 billion on June 25, India has emerged as the fifth largest holder of foreign exchange reserves in the world after China, Japan, Switzerland and Russia.
This was stated by Finance Minister Pankai Gutzalari in response to a written question to Lok Sabha.
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The minister said India’s exchange rate reserve was in a comfortable position to cover imports over 18 months and provided protection against unforeseen external shocks.
The government and the Reserve Bank of India (RBI) are closely monitoring the emerging external position that regulates policies or regulations to support strong macroeconomic growth, he added.
Çoڌrî ary said that the RBI takes regular measures to diversify its foreign exchange reserves, increasing its activities in the foreign exchange and repurchase markets, acquiring gold and exploring new markets and products, while meeting security and liquidity standards.
The minister said that the current account deficit, accompanied by an increase in foreign exchange reserves, reflects a balance of payments surplus.
In 2020-21, India’s balance of payments recorded a surplus in both the current account and the capital account, which contributed to the increase in foreign exchange reserves during the year.
In addition to exports and imports of goods and services, the overall stability of the external sector depends on other elements of the balance of payments, including remittances, current account income, the size of net capital flows and external debt.
India is comfortable with most of these foreign sector vulnerabilities, the minister said.