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4 reasons why India’s growing forex heap may be a problem
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4 reasons why India’s growing forex heap may be a problem
Ajit Ranade / TNN / Updated: Jun 15, 2021, 09:04 IST
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NEW DELHI: India’s foreign exchange stock has touched $600 billion – fourth highest in the world, ahead of Russia. That heap of dollars gives us macroeconomic stability. We now have enough to pay for 18 months of imports, whereas back in the crisis year of 1991 we didn’t have enough forex for two weeks.
At the very least we need foreign exchange to pay for importing crude oil, the lifeline of transport and logistics. We are also import-dependent for a variety of items, including vaccine supplies, steel and auto components. Is there a downside to having a large war chest of dollars? It’s complicated, but yes, there are downsides. First, some good news though. ....

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