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Informist, Friday, May 29, 2026

 

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--RBI: To upgrade FX reserve mgmt systems, processes for better risk mgmt 
--RBI: To deploy FX assets in more diversified book amid global risks FY27 
--RBI: To deploy FX assets in more diversified book to improve returns FY27 
--RBI: To deploy FX assets in more diversified book to optimise risks FY27 
--RBI: To begin framework on FX swap system for SAARC nations for 2027-2030 
--RBI: To undertake FX ops to curb excessive volatility in rupee FY27 
--RBI: FX ops to be principle-based, guided by aim of orderly rupee movement 
--RBI: Trade pacts to facilitate capital inflows to India in FY27 
--RBI: Trade pacts to boost India's trade, invest opportunities 

 

NEW DELHI – The Reserve Bank of India will increase its focus on deploying foreign currency assets in a more diversified portfolio in 2026-27 (Apr-Mar) to optimise risks and improve returns in the backdrop of increased geopolitical risks and economic policy uncertainty. The central bank will also look to upgrade its foreign exchange reserve management systems and processes for better risk management, the RBI said in its Annual Report for FY26.

 

The statement comes at a time when India's rupee has been hitting successive record lows due to a surge in global crude oil prices and strong foreign outflows following the outbreak of war in West Asia, prompting the central bank to aggressively intervene in the market to limit its fall. Since the war started on Feb. 28, the rupee has fallen almost 5% against the dollar, hitting a new lifetime low of 96.96 last week. 

 

India's foreign exchange reserves have also taken a beating and were at $688.89 billion as of May 15, almost $40 billion lower than the record high just before the war started. Of the total reserves, foreign currency assets account for over 79%, and the RBI's gold holdings just over 17%. 

 

"The global environment for international investment remained challenging. Against this backdrop, net capital flows during April-December 2025 moderated (y-o-y) and fell short of CAD (current account deficit), leading to a depletion of foreign exchange reserves by $30.8 billion on a BoP (balance of payments) basis (excluding valuation effects) during the period," the RBI said.

 

The central bank said that in FY26, it intervened in the forex market through operations in the onshore, offshore over-the-counter and exchange traded currency derivatives segments to curb excessive volatility in the rupee's exchange rate, and would continue to do so in the current financial year as well. 

 

"Going forward, the liquidity operations would continue to be in sync with the stance of monetary policy, while the foreign exchange operations would be principle-based, guided by the objective of ensuring orderly movements in the exchange rate of the INR," it said. 

 

Further, at a time when FPI inflows into India have practically dried up, the RBI expects finalisation of the ongoing bilateral and regional trade agreements to boost India's trade and investment opportunities, facilitating capital inflows during FY27. The RBI is also initiating work related to framework on currency swap arrangement for South Asian Association for Regional Cooperation countries for 2027-2030.  End

 

US$1 = INR 95.20

 

Reported by Pratiksha

Edited by Avishek Dutta

 

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