Forex reserves falling below $400 billion not a worry, say experts

As dollar money flew into local equities and debt, the RBI kept buying the flows, so that the rupee did not strengthen too much

India’s foreign exchange reserves could go below $400-billion mark. However, experts say this in itself should not be a cause for concern.

The reserves accumulation happened through portfolio flows, and now that those flows have reversed, putting pressure on the currency, the central bank is right in giving up some of its accumulated reserves defending the rupee, said market experts and economists. 

India’s forex reserves peaked at about $426 billion in mid-April. Since then, it has come down to $405 billion in the week ending July 20, the data from the Reserve Bank of India (RBI) shows. There’s another $10-11 billion worth