India's high foreign exchange reserves not enough to shield rupee

With crude oil touching $90 a barrel in international markets, India’s record foreign exchange (forex) reserves of $634 billion may not be enough to shield the rupee from the adverse effects of a spike in oil prices.

There has been a sharp rise in India’s overall import bill in the first nine months of FY22, leading to a decline in import cover despite record forex reserves.

Forex reserves at the end of December 2021 were equivalent to 12.8 months of India’s merchandise imports, down from a record high of 17.7 months in FY21.