Centre sees no cost pain for RBI on dollar deluge
The Reserve Bank of India anticipates minimal costs from significant forex inflows. High interest rates on US treasuries are expected to offset hedging expenses. These record inflows will also reduce currency intervention costs for the central bank. Economists suggest hedging costs could reach thirty-six thousand crore rupees. The RBI's balance sheet growth may impact future surplus transfers to…
The Centre remains confident the Reserve Bank of India (RBI) will not incur significant costs from the massive $127-billion inflows through foreign exchange schemes, according to sources familiar with the dedicated plans. The assessment comes amid worries the forex inflow programs, such as FCNR-B, could burden the central bank with high costs related to hedging and liquidity management.
However, experts believe the RBI will likely earn substantial returns when deploying these record inflows in US treasuries, which have seen a sharp rise in interest rates, offsetting anticipated expenses for the central bank.
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- Centre sees no cost pain for RBI on dollar deluge economictimes.indiatimes.com
