The RBI’s back to buying dollars by the truckload. Forex reserves have been going up substantially. The RBI has over $322 bn of cash reserves, and then another $13 billion from forwards (it may even be higher since the forward exposure number is from November). This is the highest ever forex reserve we have ever held. The RBI has not just bought in the spot market this (financial) year, it’s bought a truckload in the forward market as well, totally over $66 billion : Offset by Sales in Govt Bonds, Inflation Stays on Hold And the difference this time is that the RBI has managed to do this without stoking inflation. With every purchase of dollars, the RBI has sold government bonds. To buy dollars they have to print rupees which could introduce inflation. But when they sell government bonds, they get rupees back, which takes them out of circulation.… (Read On…)
[via Capital Mind]
Follow us @investmentheat – lists / @sectorheat