India’s foreign exchange reserves (INFXR=ECI) continued their upward trajectory for the third consecutive week, reaching a significant milestone of $609.02 billion as of July 14, according to data released by the central bank on Friday.
India’s Foreign Exchange Reserves Reach $609billion
The reserves recorded an impressive surge of $12.74 billion compared to the previous week, marking the most substantial gain in four months. Over the past two weeks, the reserves had already risen by a total of $3.08 billion.
Read Also
Gaura Sen Gupta, an esteemed economist at IDFC FIRST Bank, attributed a significant portion of this week-on-week jump to revaluation gains resulting from the weakening of the U.S. dollar and the decrease in U.S. Treasury yields.
The changes in foreign currency assets, when expressed in dollar terms, encompass the impact of fluctuations in the value of other currencies held in the Reserve Bank of India’s (RBI) reserves.
The RBI’s actions in the spot foreign exchange markets also contributed to the rise in reserves, as it made forex purchases. Sen Gupta emphasized that the central bank is committed to maintaining a tight range for the Indian rupee throughout the year.
India’s attractiveness to foreign investors is evident in their net purchase of $16 billion in Indian equities over the past three months, as reported by data from the National Securities Depository Limited. This influx of foreign investment has enabled the RBI to bolster its reserves through market acquisitions.
Considering the current level of forex reserves, combined with the RBI’s forward foreign exchange book standing at $19.3 billion, the country now boasts an impressive financial buffer that can cover over 11 months of imports, as calculated by Reuters.
During the same week covered by the forex reserves data, the Indian rupee experienced its most successful week in four, showcasing its resilience in the currency market. The rupee’s exchange rate fluctuated within the range of 81.9300 to 82.6550 throughout the week.
By the end of the week, the rupee’s value stood at 81.9450, marking a modest 0.1% increase for the week. The currency’s stability and modest appreciation further reflect the overall positive sentiment in the Indian economy.
The surge in India’s foreign exchange reserves represents a positive sign for the country’s financial standing and its ability to weather economic challenges. As the central bank continues its prudent management of forex reserves and foreign exchange policies, India remains well-positioned to navigate the ever-changing global economic landscape.