Despite the recovery in reserves, the Indian Rupee remains at or near its all-time low against the US dollar. The RBI continues to intervene in the fo
Despite the recovery in reserves, the Indian Rupee remains at or near its all-time low against the US dollar. The RBI continues to intervene in the foreign exchange market by selling dollars to prevent steep depreciation of the currency.
India’s foreign exchange reserves increased by USD 1.983 billion to reach USD 688.129 billion during the week ending April 25, according to official data released by the Reserve Bank of India (RBI). This marks the eighth consecutive weekly increase in the reserves. However, the reserves still remain below the all-time high of USD 704.885 billion recorded in September last year. The consistent rise in reserves reflects strong capital inflows and RBI’s efforts to manage currency volatility. In the previous week ending April 18, forex reserves had jumped by USD 8.310 billion, bringing the total to USD 686.145 billion.
Foreign Currency Assets Register Strong Growth
According to the RBI’s latest report, foreign currency assets (FCAs), which are the largest component of the total reserves, saw an increase of USD 2.168 billion and reached USD 580.663 billion during the reporting week. FCAs include major global currencies such as the Euro, Pound Sterling, and Japanese Yen, which are held in non-dollar forms but reported in US dollar terms. The valuation of these assets depends on the movement of other global currencies against the US dollar. Fluctuations in exchange rates directly impact the dollar valuation of these reserves maintained by the central bank.
Gold Reserves Dip While SDRs Inch Up
While the overall forex reserves climbed, the gold reserves held by the RBI witnessed a decline of USD 207 million, standing at USD 84.365 billion as of April 25. In contrast, Special Drawing Rights (SDRs) held with the International Monetary Fund (IMF) increased marginally by USD 21 million, bringing the total SDR value to USD 18.589 billion. SDRs serve as supplementary foreign exchange reserve assets and are allocated by the IMF. The combined movement in gold and SDR components slightly offset the rise seen in FCAs but did not prevent the overall gain in the reserves.
Forex Cover Remains Strong Amid Rupee Pressures
Despite the recovery in reserves, the Indian Rupee remains at or near its all-time low against the US dollar. The RBI continues to intervene in the foreign exchange market by selling dollars to prevent steep depreciation of the currency. The central bank also buys dollars when the Rupee strengthens, maintaining a strategic balance. According to RBI estimates, India’s foreign exchange reserves can cover approximately 10–12 months of projected imports. In 2023, India added USD 58 billion to its reserves, rebounding from a USD 71 billion decline in 2022. In 2024, reserves have risen by over USD 20 billion so far.
(With Inputs From ANI)
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