According to analysts, the Reserve Bank's active trading in the market helped it avoid seeking capital from the government to meet prescribed levels, Economic Times reported.
If not for its sell/buy swaps in the currency market and conversion of revaluation gains into realised profits, the central bank’s capital levels might have fallen below those prescribed by the Bimal Jalan committee, it said.
The RBI reduced its balance sheet by over ₹1.6 trillion during March 2022, largely through the use of foreign currency sell/buy swaps. This helped it reduce the need for economic capital by over ₹330 billion.
Gains from forex transactions increased to ₹690 billion in FY22 from ₹506 billion in the previous fiscal. Gross dollar sales in the spot market rose to $96.7 billion from $85 billion in FY21. This also included two USD-INR swaps of $5 billion each – a sell-buy swap on March 8 and a buy-sell swap maturing on March 28, ET report said.
The net OMO (open market operations) purchases by the RBI amounting to ₹2.1 trillion in FY22 also helped, experts said. This led to an increase in interest income from holdings of G-secs of ₹964 billion in FY22 compared to ₹598 billion in FY21.