Foreign portfolio flows show signs of improvement: RBI Governor

Mumbai: Reserve Bank of India's (RBI) Governor Shaktikanta Das on Wednesday said foreign portfolio flows have shown signs of improvement with positive flows of $8.5 billion from July to February 6, led by equity flows.

"Foreign portfolio flows are, however, negative during the financial year so far," he said.

On the financing side, the RBI governor said net foreign direct investment (FDI) flows remain strong at $22.3 billion during April-December 2022. It was $24.8 billion in the corresponding period last year, he added.

In his speech, while announcing the outcome of the Monetary Policy Committee on Wednesday, Shaktikanta Das said, "Net inflows under non-resident deposits increased to $3.6 billion during April-November 2022 from $2.6 billion a year ago, boosted by the Reserve Bank's July 6 measures."

Foreign exchange reserves have rebounded from $524.5 billion on October 21, 2022, to $576.8 billion as on January 27, 2023, covering around 9.4 months of projected imports for 2022-23. India's external debt ratios are low by international standards.

India's foreign exchange reserves rose by $3.03 billion to $576.761 billion in the week ending on January 27, according to the Reserve Bank of India's latest data.

The reserves are currently at their multi-month highs with the latest three consecutive weeks' rise, the RBI's Weekly Statistical Supplement Bulletin said.

The RBI Monetary Policy Committee, led by Governor Shaktikanta Das, hiked the repo rate by 25 basis points to 6.5 per cent on Wednesday.

According to the governor, a rate hike of 25 basis points is considered appropriate at the current juncture. "The reduction in the size of the rate hike provides the opportunity to evaluate the effects of the actions taken so far on the inflation outlook and the economy at large," he added.

Das-headed Monetary Policy Committee (MPC) started its three-day meeting on February 6 amid the rate hiking spree that started in May last year to check inflation.

The Monetary Policy Committee consists of three RBI officials and three external members, who are appointed by the central government. This week's monetary policy is seen as crucial as it will be the RBI's first policy stance for the calendar year 2023 and comes exactly one week after Finance Minister Nirmala Sitharaman unveiled the Union Budget 2023-24 in Parliament on February 1.

The RBI members include Governor Das, Executive Director Rajiv Ranjan and Deputy Governor Michael Debabrata Patra.

The external members are National Council of Applied Economic Research Senior Advisor Shashanka Bhide; Indira Gandhi Institute of Development Research Emeritus Professor Ashima Goyal; and Indian Institute of Management-Ahmedabad Professor Jayanth R Varma.