New Delhi / Bloomberg
Indiaâ€™s foreign-exchange reserves climbed to a record as the rupee heads for its biggest monthly advance in two years.
The currency stockpile rose by $2.54 billion in the week through March 18 to an unprecedented $355.95 billion, a Reserve Bank of India statement showed. That capped a third straight week of increases. The rupee has jumped 2.8 percent in March as Indiaâ€™s government stuck to its fiscal goals in last monthâ€™s budget and investor sentiment toward emerging markets improved amid efforts by global central banks to support growth. Thatâ€™s helped pare the Indian currencyâ€™s 2016 drop to 0.6 percent, Asiaâ€™s worst performance.
The rise in reserves provides RBI Governor Raghuram Rajan more ammunition to shield the regionâ€™s third-largest economy from capital outflows amid the possibility of further interest-rate increases by the Federal Reserve and any risks from the slowdown in China. A gauge of the rupeeâ€™s expected price swings has dropped 70 basis points this month and Edelweiss Financial Services Ltd. says a stable currency will aid central bank efforts to control inflation and give it more room to lower borrowing costs.
â€œWith record reserves in hand, the RBI is in a much more comfortable position to counter any bouts of volatility,â€ said Ankur Jhaveri, co-head of currencies and rates at Edelweiss Financial in Mumbai. The central bank will cut the benchmark repurchase rate by 25 basis points at its April 5 meeting, he said.