With Record High Forex Reserves, RBI Looks To Invest In AAA-Rated Corporate Bonds For The First Time

With record high forex reserves with it and the fall in interest rates globally, the Reserve Bank is looking to begin investments into AAA-rated corporate bonds for the first time, reports Economic Times.

The likely move to invest in corporate bonds comes as the RBI has seen its returns fall in the background of monetary policies easing globally in the wake of COVID-19 pandemic induced economic woes.

With forex reserves worth $560.63 billion at present, the RBI mostly invests in gold, sovereign debt and other such risk-free deposits.

It should be noted that AAA-rated corporate bonds offer better returns than sovereign credit. But, the RBI is expected to move carefully towards them given it has in the past not made such investments. Meanwhile, RBI is already said to have started to increase its investments in gold gradually.

RBI is likely to continue to buy dollars and intervene in the currency markets to prevent any appreciation in the value of Rupee, in turn adding to the size of the reserves.