India's external debt rose to USD 462 billion at the end of Dec'2014, up from USD 456 billion at the end of Sep'2014. This is 8% higher than USD 427 billion, a year ago. The increase was driven by Commercial borrowings, which now constitute 37% of total external debt (up from 20% in Sep'04).
Forex reserve at the end of Dec'2014 was USD 322 billion (This has risen to USD 340 bn recently).
Forex reserves currently at US$ 340 billion; Looks adequate. Forex reserve as a percentage of total external debt increased to 70%. As a percentage of non-Rupee debt, forex reserves rose to 95% from 91% in Sep'2014, a key positive for the Rupee (NYSEARCA:INR) as it lowers the pressure on the forex reserves.
Source: Ministry of Finance
Commercial borrowings constituted 37% of total external debt, followed by Deposits from non-resident Indians' deposits ((24%)) and Short term debt ((19%)):
Source: Ministry of Finance
Decrease in share of non-INR debt is a positive.
Forex reserves might see pressure if maturing forex debt does not get refinanced by fresh forex borrowings.
Rupee to trade at 61-63 in the near-term; Year-end target at INR 65/USD.
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