RBI Highlights India's Forex Reserves Decline in Import Cover

India's foreign exchange reserves cover has dropped to 11.2 months of imports, down from 11.3 months in March 2024, reveals the RBI's latest report. The report also indicates increases in short-term debt and volatile capital flows, analyzing changes in the country's International Investment Position.

The Reserve Bank of India (RBI) has reported a decrease in the country's import cover, with foreign exchange reserves able to cover 11.2 months of imports as of June 2024, down slightly from 11.3 months at the end of March.

This import cover metric, crucial for assessing resilience against economic shocks, reveals an increased ratio of short-term debt relative to reserves, standing at 20.3% by June 2024. Also, the ratio of volatile capital flows to reserves increased to 70.1% from 69.8% in March.

The RBI report details growth in India's external financial engagements, with external assets increasing by USD 108.4 billion and liabilities by USD 97.7 billion over the year. These figures reflect India's external economic position amid global financial dynamics.

(With inputs from agencies.)