India’s forex reserves rise for fifth straight week to hit fresh record high of $642.63 billion: RBI Data


India’s foreign exchange reserves rose for the fifth straight week to hit a fresh all-time high of $642.631 billion in the week ending on March 22, as per the latest data released by the Reserve Bank of India (RBI). The reserves jumped by $139 million in the reporting week. Gold reserves during the week rose from $347 million to $51.487 billion. 

India’s foreign currency assets (FCA), the biggest component of the forex reserves, though, declined by $123 million to $568.264 billion, the central bank’s weekly statistical data showed. 

Also Read: RBI likely sold US dollars after rupee slips to fresh record low, traders say

Prior to the week that ended on March 22, the foreign exchange kitty rose by $6.396 billion. In the calendar year 2023, the RBI added about $58 billion to its foreign exchange kitty. In 2022, India’s forex kitty slumped by $71 billion cumulatively. 

In October 2021, the country’s foreign exchange reserves last touched their all-time high. Much of the decline after that could be attributed to a rise in the cost of imported goods in 2022.

RBI and forex reserves

Forex reserves are assets that are held by a nation’s central bank or monetary authority. It is generally held in reserve currencies, usually the US Dollar and, to a lesser degree, the Euro, Japanese Yen, and Pound Sterling.

Changes in foreign currency assets, expressed in dollar terms, include the effect of appreciation or depreciation of other currencies held in its reserves. Forex reserves include India’s Reserve Tranche position in the International Monetary Fund.

Also Read: Forex reserves war-chest: how much is enough?

Also, the relative fall in forex reserves could be linked to the RBI’s intervention, from time to time, in the market to defend the uneven depreciation in the rupee against a surging US dollar.

Typically, the RBI intervenes in the market from time to time. through liquidity management, including through the sale of dollars, to prevent a steep depreciation in the rupee.

The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the rupee, without reference to any pre-determined target level or band. The domestic currency settled at 83.40 against the dollar on Thursday. India’s financial markets were closed on Friday for a holiday.

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Published: 29 Mar 2024, 06:26 PM IST

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