SINGAPORE: India’s foreign reserves eased to $350 billion by the end of December last year, down about $5 billion from its record peak seen in mid-2015, according to a report published today by a leading Singapore-based bank.

Currency valuations and the authorities’ active presence to contain rupee volatility likely influenced the pace of reserve accumulation, DBS Bank said in its today’s report on Asian economies.

The report said despite the modest pullback, the current stock is comfortable on domestic metrics, especially with regard to the import cover (10x) and adequacy to cover short-debt external debt levels.

But the coverage falls short when compared to the total external debt position and as a percentage of Gross Domestic Product ( GDP) vis-a-vis regional counterparts.

“Looking ahead, we expect the focus on higher reserves to persist even as the pace of accumulation slows,” DBS said.

Foreign inflows into India’s debt and equity markets lost momentum last year.

In the calendar year 2015, foreign equity inflows narrowed to $3.2 billion, a fourth of the $16 billion registered the year before.

Debt flows also moderated to $7.4 billion from a strong $26 billion in 2014.

“These flows are off to a slow start so far this year,” it said.

Given the backdrop of heightened external risks and slower global growth, incremental portfolio flows into the domestic markets will slow, the report said.

“This will lower the need for the central bank to mop-up liquidity aggressively. Additionally, authorities will be less interventionist if the rupee weakens gradually in sync with its regional trading partners, stepping in only to minimise volatility,” said DBS.

DBS Bank is the largest bank in South East Asia by assets and among the larger banks in Asia.