Mumbai, July 24: According to data released by the Reserve Bank of India (RBI) on Friday, India’s foreign exchange reserves increased by $1.08 billion to reach $676.237 billion for the week ending July 17. The previous week also saw a rise of $964 million, bringing the reserves to $675.157 billion. This marks the second consecutive week of growth in the country’s foreign exchange reserves.
As per the RBI’s Weekly Statistical Supplement, India’s foreign exchange reserves have been steadily strengthening after a decline earlier this year due to global uncertainties. The reserves had previously peaked at an all-time high of $728.494 billion for the week ending February 27.
The data indicates that the largest component of the reserves, known as foreign currency assets, rose by $4.549 billion to reach $551.057 billion. The value of these assets in dollars is influenced by fluctuations in non-U.S. currencies such as the euro, pound, and yen.
Meanwhile, the value of the country’s gold reserves decreased by $3.48 billion to $101.749 billion. Additionally, Special Drawing Rights (SDRs) increased by $44 million to reach $18.67 billion.
The RBI explained that the foreign exchange reserves include foreign currency assets, gold reserves, SDRs, and India’s reserve tranche position in the International Monetary Fund (IMF). These reserves play a crucial role in safeguarding the country against external economic shocks, maintaining the stability of the rupee, and fulfilling import and other external payment obligations.
According to reports, the RBI intervened in the foreign exchange market by selling dollars due to increased pressure on the rupee amid rising tensions in West Asia, which affected the reserves for several weeks. However, improvements are now being observed.
The RBI stated that it continuously monitors foreign exchange market activities and intervenes only to manage excessive volatility and maintain orderly conditions. The central bank does not target any specific exchange rate for intervention.
Experts believe that a strong foreign exchange reserve is a significant indicator of India’s economic strength, enhancing the country’s import capacity, aiding in meeting external payment obligations, and providing security during global financial and geopolitical uncertainties.
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