RBI acts in forwards market to protect forex reserves: Report

Current Context: Reserve Bank of India has taken the decision to advance the delivery of outstanding long-forward dollar positions points to its desire to protect the fast-depleting foreign exchange (forex) reserves.

• This decision has come into consideration as dollar strength has been pushing the rupee to record lows and the RBI wanted to ensure that its forex reserves do not drop below a certain level.
• Recently it has seen a headline fall in the reserves from $640 billion to $600 billion.
• As per RBI data also it has been observed that forex reserves dropped by over $10 billion to $590.59 billion in just two weeks.
• The current level of forex reserves is enough for less than 10 months of imports projected for 2022-23
• The main reason behind it was the rupee, earlier this week, touched a record low of 78.39/$, the 4.9 % year-to-date depreciation in the domestic currency compared to the dollar.
• The rate was at 4.65% It then dropped to 3.81% at the end of March.

MCQs

Ques: 1. As per RBI data forex reserves have dropped by over ___________ to $590.59 billion in two weeks
A.$11 billion
B.$ 12 Billion
C.$ 10 Billion
D.$ 5 Billion