Forex Reserves Jump $2.53 b to $597.93 bn

India’s foreign exchange reserves witnessed a significant increase of $2.5 billion in the week ending November 24, as reported by the Reserve Bank of India (RBI). This boost, primarily attributed to foreign portfolio flows into the debt market, reflects a strategic move by the RBI to manage the rupee’s level.

Foreign Portfolio Inflows

The surge in reserves is largely attributed to substantial foreign portfolio flows into the Indian debt market.
Experts in foreign exchange suggest that the RBI strategically absorbed these inflows to regulate the rupee’s value, contributing to the overall growth in reserves.

RBI’s Management Strategy

The Reserve Bank of India is believed to have actively managed and absorbed the foreign inflows to stabilize the rupee, a move that has played a pivotal role in the remarkable increase in the country’s foreign exchange reserves.

Gold Reserves on the Rise

In addition to the influx of foreign portfolio investments, India’s gold reserves also witnessed a noteworthy uptick.
Gold reserves increased by $296 million, reaching a total of $46.3 billion. This surge is attributed to a sharp rise in global bullion prices during the reporting week.

Rupee’s Record Low

Despite the significant increase in foreign exchange reserves, the Indian rupee closed at a record low of 83.40 against the US dollar.
This emphasizes the critical role played by the RBI in managing the currency’s value amidst global economic dynamics.

Important Questions Related to Exams

Q: How did the Reserve Bank of India (RBI) contribute to the rise in reserves?

A: The RBI played a key role by strategically absorbing foreign inflows into the debt market, effectively managing the level of the rupee and contributing to the overall increase in foreign exchange reserves.

Q: What additional factor contributed to the uptick in reserves, besides portfolio flows?

A: Gold reserves also witnessed a noteworthy increase, rising by $296 million to reach $46.3 billion. This rise was influenced by a sharp increase in global bullion prices during the reporting week.

Q: How did the RBI’s management strategy impact the Indian rupee?

A: The RBI’s active management and absorption of foreign inflows served as a stabilizing factor for the Indian rupee, despite the currency closing at a record low of 83.40 against the US dollar during the same period.

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