Banking and Financial Awareness March 2020: Week II

India’s Forex Reserved Jumped to All-Time High of $481.5 Billion

On 20th September 2019, the country’s forex reserves stood at $428.5 billion, and have grown by $53 billion to a lifetime high of $481.5 billion on 28th Feb 2020.
The fall in global crude prices has played an important role as a $20 drop saves India $30 billion per annum.
Due to the coronavirus outbreak, there is a sharp decline in Brent crude oil prices, currently trading at around $45.2 per barrel, the lowest since June 2017.

Moody's had reduced India's growth projection for the calendar year 2020 to 5.4% from 6.6% on 17th February 2020.
In less than a month’s time, it has again slashed the growth projection from 5.4% to 5.3% for 2020 in its latest “Global Macro Outlook 2020-2021".
The major cause of the downward projection is an extensive and prolonged slump as a result of COVID-19 outbreak.
The agency has said that the global spread of the coronavirus is resulting in simultaneous supply and demand shocks.

Sensex and Nifty declined to clock their biggest single-day losses (in terms of points) ever on 9th March 2020.
While Sensex declined to 1,941 points, Nifty declined to 538 points on the same day.
The sharpest fall was registered in banking, consumer durables, metal and oil and gas stocks.
The previous biggest fall for Sensex was on 24th August 2015 when the index closed 1,624 points lower at 25,741.

State Bank of India (SBI), has cut interest rates on fixed deposits (FDs) for the second time in a month on 10th March 2020.
Now the FDs maturing between 7 days to 45 days will offer an interest rate of 4% as against 4.50 % earlier.
Interest rates on FDs maturing in one-year and above have been reduced by 10 basis points.
An interest rate of 5.90% against 6 % earlier, will be applicable on FD with One-year to less than two-year tenor.

Commerce and Industry Minister Piyush Goyal, in a written reply to a question in the Lok Sabha, said that the FDI inflow stood at the highest ever for the fiscal year 2018-19.
In 2018-19, the foreign direct investment (FDI) inflow stood at a record 62 billion US dollars.
FDI is when a company takes controlling ownership in a business entity in another country.

According to data released by Reserve Bank of India (RBI) on 12th March 2020, India's current account deficit (CAD) stands just at $1.4 billion in the October- December quarter of the 2019-20 fiscal year.
The data showed that the CAD eased to 0.2% of GDP in the December quarter (3rd quarter) from 0.9% of GDP in the September quarter.
The CAD accounted for 2.7% of the GDP in the year-ago period.
As per the RBI data, the net foreign direct investment was at $10 billion in the third quarter while external commercial borrowing-related inflows stood at $3.2 billion.

The Reserve Bank of India has announced a six month US dollar sell/buy swap in a statement issued on 12th March 2020.
The US dollar sell/buy swap is announced by RBI observing the mismatch in the US dollar liquidity across the world.
Due to COVID 19 outbreak, a slump in international crude prices and a decline in bond yields in advanced economies, financial markets worldwide are facing intense selling pressures on extreme risk aversion.