is useful to take stock of india ’ s macroeconomic fundamentals and buffers, and assess them in the current and evolving conditions. first, india is widely perceived to be among the fastest growing major economies in the world in 2022 2, when the other major economies may encounter recession or considerable moderation in their growth momentum. the favorable growth differential of india provides confidence to investors. this is amply reflected in the surge of portfolio flows into india since july 2022. inflows in august alone at us $ 7. 5 billion are more than 16 world economic outlook update, july 2022, imf. times the net inflows in july. second, the recent softening of commodity prices and supply chain pressures have eased the terms of trade shock that india faced in the aftermath of the pandemic and the war. with the consequent easing of imported inflation pressures, india ’ s cpi inflation has peaked in april 2022. further, the average indian basket crude price in august at usd 97. 4 per barrel has turned out to be lower than what we had assumed for the full year - usd 105 per barrel - in the monetary policy resolution of august 5. in fact, india ’ s inflation is lower than a large number of its trading partners. third, the shift in the commodity price outlook is also altering the assessment of india ’ s current account deficit in 2022 - 23, which is now expected to remain well within sustainable levels. fourth, at a time when food security is threatened the world over by shortages and soaring prices, india ’ s large buffer stocks of food grains supplement domestic supply and assure food security domestically. fifth, india ’ s foreign exchange reserves of us $ 561 billion ( as on august 26 ) provide a cushion against external shocks, as is being demonstrated on a day - to - day basis. moreover, the reserves are also reinforced by forward assets. sixth, the health of our banking system is sound. it is well capitalised and well provisioned, with improved asset quality. this constitutes a key pillar of financial stability and is expected to provide positive spillovers for the financial markets. 6. reflecting these fundamental factors, the indian rupee has moved in an orderly manner in the current financial year so far. it has held its own in a world of sharp depreciation across other eme and ae currencies. while the us dollar has appreciated by 11. 8 per cent during the current financial year so far, the inr

with the reserve bank to meet the challenges of recent years. one such instance was the smooth completion of the government borrowing programme, despite the increased issuances in the last two years. 22. similarly, the move towards normalisation of liquidity conditions in the market has also taken place without any disruption. in response to changes in regulation, we are seeing our banks becoming active and visible in global markets and coming up with new products to meet the hedging needs of the real sector. the transition away from libor has also been achieved with relative smoothness. of course, the efforts towards complete transition need to continue as we approach the deadline for the cessation of all us dollar libor settings less than a year away. in all of these areas, market bodies such as the fimmda, pdai 4, fedai 5 and the indian banks association ( iba ) have continued to play an important role in acting as bridges between the market participants and the regulator, proactively conveying the views of the market and providing timely inputs for policy making. expectations from market participants 23. there are, however, some areas where performance of market participants can improve further. one area has been the delivery of services to the small / retail customers. while there has been a steady increase in the quantum of secondary market trades under the rbi retail direct scheme, there remains considerable scope for improvement in ensuring liquidity for the retail investors throughout market hours on the nds - om platform. we continue to get representations from customers - particularly, those undertaking forex transactions with small ticket sizes - about fair pricing of forex products. a research study by some officers in the rbi found empirical evidence of the presence of considerable price discrimination in the otc currency derivatives market. the services provided by banks on the fxretail platform need special attention. the response time and onboarding of customers on the platform can be faster. 24. the revised product regulations in otc derivative markets now permit market - makers to deal in derivative products of varying primary dealers association of india ( pdai ) foreign exchange dealers association of india ( fedai ) complexity and to offer these products only to non - retail / institutional customers who have the ability to handle the risks associated with such products. it has been reassuring to note that market participants and users have been taking a prudent approach in the use of complex products. the valuation and the risk management systems of the market - makers may need to be continually updated. customers also need