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India's forex reserves at an all-time high
Mar 28, 2015

The flood of money unleashed by central banks globally has found its way to emerging markets. As we have stated before, India remains a top bet. FII inflows are near record highs. Corporates have seized the moment and drawn up big fund raising plans. This has led to concerns about a possible reversal of the tide as and when the US Fed raises rates. However, if forex reserves are anything to go by, India continues to remain a favorite.

Largely due to foreign institutional investors (FIIs) interest in India's equity and debt markets, forex reserves have hit a record high. As long as the government can keep up the pace of reforms, there's a strong case for India to retain its top billing. However, it must be emphasized that FII money is quite fickle. The flow can reverse due to the slightest adverse event. Thus, the RBI will need to be constantly vigilant to maintain stability on this front. Fortunately for India, governor Rajan is up to the task and has handled the situation commendably thus far.

Source: RBI, ET
*As on March 20, 2015

This Chart Of The Day was published in The 5 Minute WrapUp - Learnings for stock market terrorism from real terrorism

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