Forex Update: India’s Foreign Exchange Reserves Jump $6.55 Billion To $625 Billion

Continuing the gaining streak, India’s forex reserves surged $6.55 billion to $625.626 billion during the week ended March 1, according to the latest RBI data. In the previous reporting week, the overall forex reserves had jumped by $2.975 billion to $619.072 billion.

It can be noted that in October 2021, the country’s forex kitty had reached an all-time high of $645 billion. The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global developments since last year. For the week ended March 1, the foreign currency assets, a major component of the reserves, increased by $6.043 billion to $554.231 billion, the data said.

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 increased by $569 million to $48.417 billion during the week. The special drawing rights (SDRs) were down by $17 million to $18.18 billion, according to the data.

India’s reserve position with the IMF was also down by $41 million to $4.798 billion in the reporting week, the apex bank data showed.

The Rupee

During the week ended March 8, the Indian rupee moved in a range of 22.5 paise though the US dollar got sold off due to to constant inflows into Indian markets. RBI bought dollars but left the buying in last two days to ensure sufficient liquidity in the market in dollar terms as it grapples with the swap on 11th.

Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors, said, “Inflows will continue and exporters to continue selling on all upticks for the medium term while importers can buy the dips to hedge very near term. Next week the range could be 82.50 to 82.90 with inflows continuing, RBI absorbing and upticks getting sold off.”