India’s foreign exchange reserves have surged to a one-month high, reaching $622.47 billion as of February 2, according to data released by the Reserve Bank of India (RBI) on February 9. This marks the second consecutive week of increase, with reserves climbing by $5.74 billion during the reporting period, the largest rise in nearly two months. The previous week saw a modest increase of $590 million.
Factors Driving Reserve Growth
RBI Intervention: The Reserve Bank of India actively intervenes in the foreign exchange market to mitigate excessive volatility in the value of the rupee. This intervention plays a significant role in influencing changes in the foreign exchange reserves.
Appreciation and Depreciation of Assets: Fluctuations in the value of foreign assets held within the reserves also contribute to changes in foreign currency assets. These fluctuations can stem from the appreciation or depreciation of the assets relative to the base currency.