Mumbai : The dip in foreign investor flows and the widening current account deficit will impact the forex reserves accretion, says a foreign bank. “Looking ahead, the pace of reserves accumulation is likely to moderate on slower portfolio inflows and a wider current account deficit,” Singaporean lender DBS said Tuesday. It can be noted that forex kitty had touched a lifetime high of over $400 billion last month, but have fallen for three consecutive weeks after that.
The bank said any deterioration in the global risk- appetite will also require Indian authorities to dip into reserves to defend the rupee against market volatility, but added the current stock is “sufficient to cushion” against external vulnerabilities.
On the fund inflows front, it said the first half of the calendar year saw strong inflows from portfolio investors which averaged $3.8 billion per month till June, but the same came down to $0.4 billion in August.