India Needs Foreign Exchange Reserves Buffer To Tackle

1. India needs foreign exchange
reserves buffer to tackle
exchange rate volatility:
Raghuram Rajan
PRESENTATION BY :- ROYAL CHAWHAN
SUBMITTED TO:- MERVIN FELIX CALEB

2. What is FOREX RESERVES.
 The international Monetary Found (IMF) defines foreign as :-
 External assets that a country’s monetary authority can use to meet the balance of
payments financing needs.
 Most nations hold the vast majority of their foreign currency reserves in U.S
dollars, followed by euros.
 Foreign currency reserves are vital to a nation’s economic well-being
 India’s foreign exchange reserves rose to $605 billion for the week ended June
4,2021 form $598 billion the week before.

3. RECORDS SET THIS YEAR
 While India was a large beneficiary of dollar flows, it what’s not
the only one.
 Still the reserve build-up in India is among the strongest across
emerging economies.
 Reserve have jumped by over $140 billion since late 2019,
registering among the highest increases in Asia.
 This is the fourth largest after Taiwan , Hungary and Philippines.

5.  Former RBI Governor Raghuram Rajan said that india need to keep a
buffer stock of foreign exchange to protect itself from the fluctuations
in the exchange rate.
 Rajan said that this is also necessary because we do not have any
friends in the swap lines.
 Emerging markets faced inflation and other problems after the US
Federal Reserve halted its Quantitative Easing Program in 2013. This is
called a taper tantrum.

6.  Rajan said that what happened during the taper tantrum was a very
bad experience. So unless we have any outside aid, we have to
prepare ourselves and that’s why we started creating reserves of
foreign exchange.
 According to RBI data, by July 2, the country’s foreign reserve had
increased by $ 1.013 billion to a record level of $610.012 billion.

7. REFERENCE
 www.livemint.com
 www.share.America.gov
 www.m.rbi.org.in

8. THANK YOU