India’s foreign exchange (forex) reserves have increased by $1.229 billion, reaching a total of $596.280 billion as per the data from the Reserve Bank of India (RBI). This marks a nearly 2-month high and the second consecutive weekly rise in reserves. The rise in reserves was primarily driven by the growth in foreign currency assets (FCA) and gold reserves, while special drawing rights (SDRs) experienced a slight dip.
Increase in Forex Reserves
According to the RBI’s data, forex reserves rose by $1.229 billion to $596.280 billion in the week ending July 7, 2023. This follows a previous increase of $1.853 billion. The biggest component of the reserves, foreign currency assets (FCA), saw a significant rise of $989 million to reach $528.968 billion. Gold reserves also grew by $228 million to $44.060 billion, while the reserve position in the International Monetary Fund (IMF) increased by $15 million to $5.017 billion.
Slight Dip in SDRs
In contrast, Special Drawing Rights (SDRs) experienced a marginal decline of $4 million, settling at $18.235 billion in the week ending July 7, 2023.
Rupee Performance and Intervention by RBI
To mitigate rupee depreciation, the RBI has been actively intervening in the forex market through both spot and forward positions. On Friday, the Indian rupee recorded a slightly lower settlement against the US dollar. However, it witnessed its best week in four due to selling in the greenback and optimism surrounding the nearing end of the Federal Reserve’s rate hike. The rupee closed at 82.1615 per dollar in the interbank forex market, registering a 0.5% pickup during the trading week that ended on July 14, 2023.