Ex-RBI Deputy Governor Urges India to Build $1 Trillion Forex Reserve Buffer

Former RBI Deputy Governor Michael Patra has advocated for India to increase its foreign exchange reserves to at least $1 trillion to strengthen the Reserve Bank of India's capacity to intervene in currency markets. This target includes buffers to cover one-year external debt obligations and potential foreign portfolio investment outflows. India's reserves, which reached a record $728.5 billion in February, have recently declined amid heightened volatility due to the Iran conflict and rising crude prices. Weak capital inflows and rising trade deficits add to external stability concerns, prompting calls for enhanced reserve buffers to manage currency fluctuations and maintain market confidence.