Forex Reserves

The Reserve Bank of India’s swap scheme for forex deposits has been a dramatic success, going by the huge sum of money attracted. Don’t bemoan its closure ahead of schedule, though. Here’s why

Even the central banks of US allies are diversifying away from the dollar. Notably, US debt is no longer risk free. In an extreme global crisis, a diversified reserve base would serve India well. And risk mitigation isn’t de-dollarization.

The scheme has been a success but it’s far from costless. In any case, Indian policy must focus on a lasting solution to the country’s current account deficit, which demands action on two other fronts. Treat the cause, not the symptom.

As local unit plunges 6.5% participation as percentage of turnover almost doubles; brokers say such trades are hedges against currency volatility

The Reserve Bank of India's risk-shielded deposit scheme will likely succeed in drawing large volumes of dollars, given the high returns promised. NRIs have a big window to benefit from rate arbitrage. But is the cost that India will bear justified?

It’s time for the country to shift from an import-and-store model to a circulate-and-recycle one. There is plenty of gold lying immobile in the country and various measures can be taken to mobilize it. Here’s what should be done.

Shankar Sharma argues that India’s forex reserves are overwhelmingly built on “rented capital”, SIP inflows are facilitating foreign exits, and the country may soon have to choose between protecting the rupee and protecting the stock market.

Gold’s status as a hedge against uncertainty wobbled after war erupted in West Asia. Its price fell. Explanations abound for this anomaly, such as Turkey’s sell-off to defend its currency. But broadly, central bank purchases reflect the travails of globalization.