India's Forex Reserves Jump $2.35 Billion To $596 Billion: RBI

According to the RBI, for the week ended June 16, the foreign currency assets, a major component of the reserves, increased by $2.578 billion to $527.651 billion. 

India's reserves of foreign currency hit an all-time high of $645 billion in October 2021.

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India's foreign exchange (forex) reserves rose by $2.35 billion to reach $596.098 billion by the week ending June 16, according to the Reserve Bank of India data published on Friday. In the previous reporting week, the overall reserves had experienced a decline of $1.318 billion, reaching $593.749 billion. According to the Weekly Statistical Supplement released by the RBI, for the week ended June 16, the foreign currency assets, a major component of the reserves, increased by $2.578 billion to $527.651 billion. 

These 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 declined by $324 million to $45.049 billion, as per the RBI data. Similarly, the Special Drawing Rights (SDRs) were up by $62 million to $18.249 billion.

The country's reserve position with the IMF was up by $34 million to $5.149 billion in the reporting week, as per the central bank's data. 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. 

Meanwhile, on Friday the rupee depreciated by 5 paise to close at 82.02 (provisional) against the US dollar amid strong American currency against major rivals overseas and negative sentiment in equity markets. The outflow of foreign funds from domestic equities also put pressure on the local unit.