RBI Policy
FX reserves $691.5 bln, will scale up when possible - Malhotra
This story was originally published at 15:15 IST on 6 June 2025
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--RBI Malhotra: May 30 FX reserves $691.5 bln
--RBI Malhotra: India's forex reserves enough to fund 11 months of imports
--RBI Malhotra: Net FDI important for FX reserves
--RBI Malhotra: FX reserves at 11 months' import cover, 96% of external debt
--RBI Malhotra: Will build FX reserves if there are opportunities
--RBI Malhotra: Can build forex reserves if there are opportunities
--RBI Malhotra: Not unduly worried about building FX reserves
--RBI Malhotra: Our FX policy is very clear; we do not target any level
--RBI Malhotra: We let exchange rate get determined by market
MUMBAI – India's foreign exchange reserves fell to $691.5 billion in the week ended May 30 from $692.72 billion the week ago, Reserve Bank of India Governor Sanjay Malhotra said while detailing the outcome of the Monetary Policy Committee meeting on Friday. "These are sufficient to fund more than 11 months of goods imports and about 96% of external debt outstanding," Malhotra said.
In the week ended May 30, the rupee fell 0.6% against the dollar, while it rose 0.3% the week before. Last week, the dollar index, which measures the strength of the greenback against a basket of six major currencies, rose 0.3%. Calculated in dollar terms, the RBI's foreign exchange reserves also reflect the impact of appreciation or depreciation of currencies other than the US dollar, such as the euro, the pound sterling, and the yen, held by the central bank.
Answering questions by reporters at the post-policy press conference, Malhotra said the central bank was not "unduly concerned" about the impact of net short outstanding dollar/rupee forward book on reserves. "We are not unduly worried on that...It is a very, very comfortable level (foreign exchange reserves) to be in. Yes, if there are opportunities and we can build reserves, that will happen. But that is not something we will be unduly bothered about," he said.
In recent weeks, the central bank has refrained from intervening aggressively in the currency market by selling dollars to prevent the rupee from falling sharply, as per market participants. Answering a question about how the RBI will navigate building foreign exchange reserves and managing the exchange rate volatitity amid uncertain US policies, Malhotra said the RBI's policy was very clear and consistent and it doesn't target any specific level.
"We do not manage, try to target, any price, any level, any band...if there is any abnormal volatility, that is what we try to counter, and we let the prices be determined by the market," he said.
While detailing the policy outcome, he noted widespready commentaries over the moderation of the net foreign direct investment and said the net FDI was considered primarily due to concerns regarding its impact on foreign exchange reserves. "However, when it comes to investment it is the gross FDI, which is actually important," Malhotra said. End
Reported by Sourabh Kumar
Edited by Avishek Dutta
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