Forex Reserves Hit Record High In India

• India's foreign exchange reserves have reached a staggering new peak of $648.7 billion, as of May 17th, 2024.
• This marks a significant milestone, surpassing the previous record set just weeks earlier.
• The surge is attributed to multiple factors, including strong foreign direct investment and a rise in global remittances.
• A robust forex reserve provides India with a buffer against external economic shocks and strengthens its import cover.
• This financial cushion can also help stabilize the rupee and provide the Reserve Bank of India with more flexibility in managing monetary policy.
• Some experts caution however, that a high reserve level could indicate underutilization of capital and might necessitate policy adjustments.