Rising for the second consecutive week, India’s forex reserves jumped $5.97 billion to $578.778 billion in the week ended March 24, according to the latest RBI data. With this, the country’s reserves increased nearly $17 billion in March 2023 alone as the central bank bought dollars at lower levels to keep the rupee movement under check. In the previous reporting week, the kitty had risen by $12.8 billion to $572.8 billion.
India’s foreign exchange (forex) had reached an all-time high of $645 billion in October 2021. Since then, the reserves saw a continuous decline as the central bank deploys the kitty to defend the rupee amid pressures caused majorly by global developments.
Reserves dropped sharply by almost 18.5 per cent i.e. around $118 bn from a record high of $642 bn touched in September 2021 to $524.52 bn in October 2022. But, reserves rose from October 2022 to $578.80 billion (till 17th March) as RBI bought dollars on dip to replenish its reserves.
According to the Weekly Statistical Supplement released by the RBI on Friday, for the week ended March 24, the foreign currency assets, a major component of the reserves, increased by $4.38 billion to $509.728 billion.
Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Gold reserves jumped by $1.37 billion to $45.48 billion, the RBI said. The special drawing rights (SDRs) were up by $201 million to $18.419 billion, the apex bank said. The country’s reserve position with the IMF was also up by $27 million to $5.151 billion in the reporting week, the apex bank data showed.
“The current level of foreign reserves is enough for around 9-10 months of imports," according to Finrex Treasury Advisors. It said that in order to replenish its reserves RBI will continue to buy dollars at lower levels. We can once again see reserves to reach the $600 billion mark in coming months."
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