India's Forex Reserve Reaches 15-Month High, Crosses $600-Billion Mark: RBI Data
The Reserve Bank of India data on Friday showed that the country's forex reserve rose by $12.743 billion to $609.022 billion in the week that ended on July 14.
India's foreign exchange reserve rose for the third week straight to reach over 600 billion, the highest in nearly 15 months. The Reserve Bank of India data on Friday showed that the country's forex reserve rose by $12.743 billion to $609.022 billion in the week that ended on July 14. In the previous reporting week, the overall reserves had increased by $1.23 billion to $596.28 billion.
According to the Weekly Statistical Supplement released by the RBI, for the week ended July 14, the foreign currency assets, a major component of the reserves, declined by $11.198 billion to $540.166 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 country's reserves of foreign currency hit an all-time high of $645 billion in October 2021. The reserves have been decreasing as the central bank has utilised its funds to support the rupee against pressure from international events.
During the reporting week, Gold reserves rose by $1.137 billion to $45.197 billion, as per the RBI data. On the other hand, the Special Drawing Rights (SDRs) were up by $250 million to $18.484 billion.
The country's reserve position with the IMF was down by $158 million to $5.175 billion in the reporting week, the central bank data showed.
Forex reserves are essential assets maintained in foreign currencies by the central bank. They frequently support the exchange rate and have an impact on monetary policy. The RBI intervenes in the spot and forwards markets to stop the rupee from making unpredictable movements that have an impact on the overall reserves position. Forex changes also occur from valuation gains or losses.
According to IDFC FIRST Bank economist Gaura Sen Gupta, as reported the Reuters, the three straight week rise in forex reserves is driven by revaluation gains due to dollar weakness and reduction in US Treasury yields.
Meanwhile, the rupee depreciated 4 paise to close at 81.97 (provisional) against the US dollar on Friday, weighed down by a rebound in the dollar and firm crude oil prices in global markets. Besides, a negative trend in domestic equity benchmarks also dented investor sentiment, forex traders said.
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