India’s Forex Reserves Hit Record High of $692.3 Billion

India’s foreign exchange reserves reached a record high of $692.3 billion as of September 20, according to data released by the Reserve Bank of India on September 27. The reserves increased by $2.84 billion during the week, following a total rise of $19.3 billion over the previous five weeks. The rise in reserves was driven by the Reserve Bank of India’s interventions in the forex market and inflows into local stocks and bonds.

Breakdown of Reserves

Foreign Currency Assets (FCA): The largest component of forex reserves, foreign currency assets, rose to $605.7 billion from $603.6 billion.

Gold Reserves: Gold reserves increased to $63.6 billion from $62.9 billion.

Special Drawing Rights (SDRs): SDRs with the International Monetary Fund stood at $18.5 billion, up from $18.4 billion.

Reserve Tranche Position (IMF): The reserve tranche position with the IMF slightly decreased to $4.46 billion from $4.52 billion.

Rupee Performance and RBI’s Role

The RBI actively intervenes in the forex market to manage rupee volatility, with the rupee hitting a two-month high of 83.4850 against the US dollar last week, aided by the US Federal Reserve’s 50-basis-point rate cut. However, by September 27, the rupee had settled at 83.70, slipping 0.1% week-on-week.