Souce: Financial Express

 

Foreign exchange reserves are important for any country. But unfortunately for India, it does not fare too well when it comes to forex reserves. As shown in the chart, India has the lowest level of forex reserves in the BRIC peer set. Given that forex reserves are an important resource for the central bank, it does not portray a good picture for India. The reserves are available to the central bank to manage the currency in the foreign markets. The bank can use these reserves to intervene in the currency markets to insulate the currency against any untoward shock. This means that the Indian central bank has lower resources available to support the Indian Rupee in the global currency markets as compared to its BRIC peers.