India's record foreign exchange pile may not be adequate: RBI paper

Foreign exchange reserves surged to $605 billion in the week to June 4 as the central bank mopped up dollars.

India’s record more than $600 billion of foreign exchange reserves might not be good enough, as it falls short on some measures including import cover and liability outflows, according to a new research from the central bank.

“While foreign exchange reserves provide cushions against unforeseen external shocks, levels are often deceptive,” Reserve Bank of India researchers, led by Deputy Governor Michael Debabrata Patra, wrote in the latest monthly bulletin. “A better gauge of external vulnerability is an assessment of specific indicators.”

Foreign exchange reserves surged to $605 billion in the week to June 4 as the RBI mopped up dollars