India's Foreign Exchange Reserves Are ‘Not Built Out Of Export Surplus': RBI Deputy Governor Kanungo

Era of accommodative monetary policy regime round the corner: BP Kanungo

India’s foreign exchange reserves are not built out of an export surplus, according to Reserve Bank of India Deputy Governor BP Kanungo.

“Inasmuch as it (forex reserves) provides a bulwark against sudden flow reversals, it enhances the country’s ability to cope with the fallout and, indeed, contributes to global stability as well,” he said in a speech delivered at the Forex Association of India Conference in Singapore earlier this month.

India’s forex reserves stood at $430.50 billion in the week ended August 16. Though long-term flows related to foreign direct investment (FDI) and long-term debt have been fairly stable, keeping in tandem with the economic fundamentals, Kanungo assessed that portfolio flows have their own dynamics depending as much on the attractiveness of returns of Indian assets as the global factors determining their risk appetite.