This is despite strong reserve cushions, moderate external debt, and a “fairly priced exchange rate that has withered less from the monotonous strengthening of the US dollar than many peers.” Data from the RBI Bulletin revealed that RBI bought $10 billion worth of currencies and sold $8. 1 billion in May 2022, leading to a net purchase of $2 billion in May.
“The Indian economy remains resilient in the face of formidable global headwinds. The ripple effects of the geopolitical fallout are visible across multiple sectors, slowing the pace of recovery. Despite this crushing shock, there are sparks in the wind igniting the innate strength of the economy and put it on track to become the fastest growing economy in the world,” he said. “If the moderation in commodity prices seen in recent weeks continues as supply chain pressures ease, the worst of the recent inflation spike will be left behind, allowing the Indian economy to escape the global inflation trap. . . “, says the report.