The Reserve Bank of India (RBI) has been actively working to manage currency volatility due to persistent dollar outflows from the equity market, which has pushed the Indian rupee to record lows. The RBI has been using its foreign exchange reserves to stabilize the currency, leading to a decline in reserves from $705 billion to $656.58 billion. The report by Union Bank of India notes that the RBI is curtailing currency volatility by utilizing its forex reserves. The government’s fiscal position has also improved, with its balance slipping into Ways and Means Advances (WMA) for the first time since April 2023, but recovering to Rs 1.3 lakh crore by November 22, 2024. The report also highlights the narrowing credit-deposit growth gap in the banking sector, with credit growth at 11.1% and deposit growth at 11.2% for the fortnight ended November 15, 2024. The RBI’s proactive measures are aimed at managing liquidity, maintaining currency stability, and supporting the broader economic framework amid ongoing global volatility and domestic fiscal challenges.
Notable diminution in foreign exchange reserves due to RBI’s foreign exchange buffers to stabilize currency fluctuations.
by newsworm | Dec 5, 2024 | Banking, RBI, Union Bank of India