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The Reserve Bank of India (RBI) on Monday said the creation of an economic stabilisation fund would provide fiscal headroom and help India respond proactively to global headwinds, even as it flagged risks from ongoing geopolitical tensions and oil price volatility In its monthly bulletin, the central bank said a prolonged period of war and heightened uncertainty could hurt the global economic outlook, which was already in flux. It added that India’s external dependence on crude oil warrants close monitoring and timely policy action to limit adverse spillovers.“Given India’s external dependence on crude oil, the evolving situation requires close monitoring and proactive measures to limit adverse spillovers,” the RBI said.The central bank noted that India’s foreign exchange reserves remain adequate to cushion external shocks. As of March 13, reserves stood at $709.76 billion, covering 11.2 months of imports and about 95% of the country’s external debt.The remarks come amid pressure on the rupee, which has weakened nearly 4% so far this year and hit a record low of 93.98 against the U.S. dollar on Monday. The RBI has intervened in both spot and forward markets, selling dollars to curb volatility.The report also backed the government’s proposed ₹573-billion economic stabilisation fund, which aims to address supply chain disruptions and unexpected economic shocks. Finance Minister Nirmala Sitharaman had earlier said the fund would act as a buffer against external uncertainties.On the currency front, the RBI said it had resumed net dollar purchases in January after eight months, buying $2.52 billion on a net basis. Overall, the central bank purchased nearly $28 billion and sold $25.47 billion during the month, even as the rupee remained under pressure from global factors, including geopolitical tensions and foreign outflows.The RBI added that India’s ability to absorb external shocks has strengthened over time, but emphasised the need for continued vigilance amid evolving global risks.