World
How many days of forex reserve India currently has as PM Modi makes big appeal to Indians? Govt might ban this to save US dollar, it is…
Desperate times call for desperate measures, and this aptly suits the situation we are in. The Prime Minister’s speech on gold purchases and petrol-diesel carried a clear sense of urgency. The reason was obvious as the war, which should have ended long ago, is showing no signs of easing. And this is where the real problem begins. The rise in crude oil prices has weighed heavily on India’s import bill. The ongoing crisis is also raising fears of a situation similar to the economic crisis of 1991. As a result, the country may soon have to take emergency measures. So, how much foreign exchange reserve does India have left?
Increase in fuel prices cannot be ruled out
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One of the most prominent proposals under discussion is a hike in fuel prices. If this happens, it would be the first increase since the Iran war began. However, no final decision has been taken yet.
‘Soft ban’ on non-essential imports
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A major concern for officials is the widening current account deficit. To protect the country’s foreign exchange reserves, the government is considering restricting or tightening imports of non-essential goods such as gold and consumer electronics. If the situation does not improve, officials may also temporarily restrict foreign currency withdrawals for non-essential purposes, such as foreign travel.
Impact of oil crisis on India
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India is the world’s third-largest oil importer. The disruption of oil supplies through the Strait of Hormuz and rising global energy prices are causing significant losses. India is spending a huge amount of dollars to buy expensive crude oil. This has pushed the Indian rupee to a record low. So far this year, the rupee has weakened by 5.6% against the dollar, making it the worst-performing currency among major Asian economies.
How much forex reserve does India have?
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The Reserve Bank of India (RBI) is taking several important steps to prevent the rupee from falling further. According to reports, India’s foreign exchange reserves fell to USD 690.7 billion as of May. The reserves reportedly declined by USD 1 billion, reaching the lowest level in more than a month. However, these reserves are still enough to cover 10 to 11 months of imports.
RBI’s efforts to keep the situation under control
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The RBI has capped the daily limit for banks at USD 100 million to curb speculation in the foreign exchange market. RBI may also change currency hedging rules for importers and direct exporters, asking exporters to immediately bring back the dollars they earn from foreign trade.
What did the Prime Minister say?
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On Sunday, Prime Minister Narendra Modi appealed to the people of the country for cooperation during this time of crisis. He suggested people to save fuel, people should use public transport and work from home. He also asked people to stop buying gold, as gold is one of India’s biggest imports. Experts believe the Prime Minister’s warning is part of preparations to deal with any potential future shortages. Other Asian countries, such as Vietnam and Thailand, have also issued similar work-from-home advisories to save dollars and fuel.
