Mumbai: Though the country’s forex kitty was at an all time high of USD 330 billion, there should be no complacency as no amount of reserves may be enough to fight extreme volatility, RBI Deputy Governor H R Khan said.
Days after weekly data showed an over USD 6 billion jump in forex to an all-time high, Khan said, “Foreign currency reserves have improved. Right now we’re at USD 330 billion, highest ever. But there is also a view that no amount of foreign exchange reserves can cushion when there is extreme volatility or external shocks.”
Referring to the jump in reserves, Khan said, “We are much better placed. In terms of fool proofing our balance sheet we have done quite a few things.” He said the macro economic vulnerabilities in the country’s economy have “significantly receded” due to the high growth, contained current account deficit, lower inflation and high forex reserves.
Khan said, “But one cannot be complacent. If another round of Quantitative Easing unwinding happens, we would be the last possibly to be affected….(But we) can’t afford to be complacent and we should be prepared to face vulnerabilities. At this juncture India cannot afford to lose the great opportunity it possibly got over so many years. Its strong position among emerging countries.”
