India becomes world’s 4th largest forex holder

India has emerged as the world's fourth largest holder of foreign exchange reserves, surpassing Russia, following a record surge in dollar inflows. This increase in forex reserves took place even though the gold reserves decreased by $2.59 billion. The Reserve Bank of India (RBI) has tightened rules on bank deposit interest rates to better manage volatility.

The RBI is also conducting a Rs1 lakh crore open market operation sale of government bonds to manage excess liquidity resulting from the strong foreign currency inflows.