India’s import cover reaches five-year high

For those who don’t know, import cover is the measurement of a nation's ability to support its economy and how it traded with the rest of the world. Now, the good news is that for India, this import cover has risen to a five-year high, which means that any hit on the currency due to an increase in the fed rate can now be cushioned well.

This cushion of foreign exchange reserves ranged between $330 and $350 billion through a major part of 2015, and has been adequate to fund more than 10 months of imports.

This has happened because of the shrinking import bill, which in turn has improved the adequacy levels of foreign exchange reserves. This has happened despite volatile capital flows, given that several foreign portfolio investors withdrew large part of their Indian investments, fearing a hike in policy rates by the US Federal Reserve.

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