RBI’s returns from foreign investments set to surge by $6-8 billion in FY24
For the week to July 7, the forex reserves rose by $1.23 billion to $596.3 billion, but still vastly down from the $645 billion peak in October 2021.
Reserve Bank of India (Photo: ANI)
NEW DELHI: The globally elevated interest rates are set to buoy the returns from the Reserve Bank’s foreign investments to the tune of $6-8 billion this fiscal, which will help the monetary authority pay higher dividend to the government and also buffer up the forex reserves a la the FY21 fashion, says an overseas brokerage report.
Traditionally, the RBI parks more than 70 per cent of the assets overseas, mostly in the US treasury bill, where the interest rates have been on northward ho for a long now. Similar is the case in the EU and elsewhere along with the domestic rates.
For the week to July 7, the forex reserves rose by $1.23 billion to $596.3 billion, but still vastly down from the $645 billion peak in October 2021.
The reserves have been declining as RBI deploys the kitty to defend the rupee amid pressures caused majorly by global developments. Of the total, the major component of foreign currency assets increased by $989 million to $528.97 billion.
The RBI returns have typically been higher on domestic assets due to yield differentials. But now both foreign as well as domestic assets should now be generating higher returns, with the gap between domestic and foreign interest rates shrinking, says Rahul Bajoria of Barclays Securities.
In FY20 the RBI balance sheet was Rs 53,34,792 crore or 5.50 per cent of current revaluation balance and made a provisioning of Rs 73,615 crore and yet transferred Rs 57,128 crore to the government in dividend/surplus transfer.
