India's foreign exchange reserves have surged by $6.596 billion, reaching a total of $665.396 billion in the week ending March 28, marking the fourth consecutive week of growth, according to official data from the Reserve Bank of India (RBI). This sharp increase is the largest in nearly five months, following a period of decline.
As per the RBI's data, India's forex reserves have risen by a cumulative $20.1 billion over the past three weeks, with a notable $6.6 billion increase in the latest reporting week. Experts attribute the recent declines to foreign investors' concerns over Indian equity markets, which have since shown signs of recovery.
The data also revealed that India's gold reserves, as of March 28, amounted to $77.793 billion, while foreign currency assets totaled $565.014 billion. During the same period, the Indian rupee appreciated by 0.6% against the US dollar, reflecting renewed confidence in the Indian stock market.
Analysts believe that fluctuations in forex reserves are often linked to RBI interventions aimed at curbing sharp depreciation in the rupee. These interventions typically involve the RBI managing liquidity, including selling dollars when the rupee weakens and buying dollars when the rupee strengthens.
India's foreign exchange reserves are considered sufficient to cover approximately 10-11 months of projected imports, according to RBI estimates.
In 2023, India's forex reserves increased by around $58 billion, contrasting with a decline of $71 billion in 2022. So far in 2024, reserves have risen by over $20 billion.
Foreign exchange reserves, or FX reserves, are assets held by a country's central bank, primarily in reserve currencies such as the US dollar, along with smaller portions in currencies like the euro, Japanese yen, and pound sterling. The RBI actively manages these reserves to stabilize the rupee and ensure liquidity in the market. (The Hindubusinessline)
