Forex Reserve Rises By $700 Million To $602 Billion, Ends 3-Week Losing Run

Earlier, forex reserves fell by $2.41 billion to reach $601.5 billion for the week ended on August 4. In October 2021, the country's foreign reserves saw a historic peak, reaching $645 billion.

India's foreign exchange (forex) reserves have risen by $708 million to reach $602.161 billion for the week ending August 11, the Reserve Bank of India (RBI) data revealed on Friday. The Forex kitty has snapped 3 weeks of a losing streak. Earlier, forex reserves fell by $2.41 billion to reach $601.5 billion for the week ending August 4. 

The RBI's Weekly Statistical Supplement also showed that Foreign Currency Assets (FCAs) have surged by $999 million to reach $534.40 billion. The foreign currency assets are valued in dollars and take into account the impact of changes in value for currencies such as the euro, pound, and yen held in the foreign exchange reserves. Foreign Currency Assets (FCAs) are held in diverse currencies like the US dollar, Euro, pound sterling, Australian dollar, etc.

The RBI data showed that Gold reserves saw a decline of $340 million, settling at $44.34 billion, while Special Drawing Rights (SDRs) rose by $51 million to $18.32 billion. The India reserve position with the International Monetary Fund (IMF) contracted by $2 million to reach $5.10 billion in the reporting week. 

In October 2021, the country's foreign currency reserves saw a historic peak, reaching $645 billion. However, these reserves have been declining since the RBI deployed its resources to bolster the rupee in response to global developments.

Forex reserves represent crucial assets held in foreign currencies by the central bank. They play a pivotal role in maintaining exchange rates and exert an influence on monetary policy. The RBI intervenes in spot and forwards markets to curb unpredictable fluctuations in the rupee, which can influence the overall reserves. Additionally, forex variations arise from valuation gains or losses.

According to a Reuters report, traders have indicated that the RBI probably sold dollars via public sector banks this week to prevent the rupee from reaching an all-time low.

The report noted that during the week corresponding to the forex reserves data, the rupee fluctuated between 82.6725 and 82.8525 against the dollar.

By the end of the week, on Friday, the rupee closed at 83.1025, marking a 0.2 per cent decline over the week.