Today in Macronomics we consider an interesting point: RBI’s actions on the rupee-dollar, after demonetization. They’ve been buying dollars. A lot of them. Forex reserves now stand at $420 billion (from $370 bn in Dec 2016) if you include forward purchases that RBI has made. About Rs. 83,000 cr. has been printed to buy rupees, and another Rs. 130,000 cr. remains to be printed if RBI goes and exercises its forward contract purchases. That’s made things wonky.
Note: We’ll also speak about why we think the situation will reverse soon. We’re at an interesting turning point.