The reserves are still significantly stronger than they were during the preceding time period, which included part of the Eurozone crisis and the Federal Reserve’s taper tantrum, thanks to a sustained accumulation through to their high last year.
During the last crisis, the rupee saw one of the worst performances among emerging-market currencies, falling over 30% versus the dollar between September 2011 and September 2013. In comparison to the US dollar, it has decreased by roughly 6.8% in 2022, a far lesser decline than most of its competitors.
The import insurance that these reserves offer has been decreased by the reduction to nine months, which is still far more than the three months that is the industry norm but substantially less than the 19 months at the start of 2021.
Shaktikanta Das, the governor of the central bank, says that thus far, the number of reserves and the banking sector are both sound and capable of absorbing any incoming shocks.
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