India's Forex Reserves Up By $4.26 Bn

BENGALURU: With higher interest rates in the U.S., the foreign portfolio investors are expected to be led away from the emerging markets such as India.

India’s foreign exchange reserves increased by $4.26 billion to $339.99 billion for the week ended March 20, Reserve Bank of India data showed.

According to analysts, the Indian reserves are being build-up by the Reserve Bank of India to absorb any future global financial shock that was witnessed in June 2013. “The RBI is building up the reserves to counter any future financial shocks like the one which was witnessed at the time of the tapering announcements were made. Apart from that the reserves will also act as a support to the Indian rupee,” Anindya Banerjee, senior manager, currency derivatives, Kotak Securities told IANS.

The RBI is cautious about the U.S. Fed’s stand that the rate hike might take place in the later part of the year.

With higher interest rates in the U.S., the foreign portfolio investors are expected to be led away from the emerging markets such as India.

The U.S. Fed dropped an assurance to be “patient” in raising interest rates and signalled the hike could come by mid to late this year.

“Just because we removed the word patient from our statement doesn’t mean we will be impatient,” Janet Yellen, U.S. Federal Reserve Board chairman said at a press conference after a globally—awaited meeting of the policy committee on March 18.
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