India’s forex reserves jump to over two-year high of $636.1 bn

India’s foreign exchange reserves witnessed a significant surge, marking a third consecutive increase in the week ended March 8, 2024. This surge propelled the reserves to reach a two-year high of $636.1 billion, showing the highest weekly increase since July 14, 2023, according to data from the Reserve Bank of India (RBI).

Key Points:

1. Record-Breaking Increase:

• Reserves rose by $10.47 billion during the week, the highest weekly increase since July 14, 2023.
• The current level of reserves stands close to the all-time high of $645 billion achieved in October 2021.

2. Factors Driving the Increase:

• Foreign currency assets surged by $8.12 billion to reach $562.4 billion.
• Appreciation in the rupee, along with RBI’s intervention, likely contributed to this increase.
• RBI’s active buying of dollars in the spot market absorbed heavy inflows into both debt and equities, as noted by analysts.

3. Growth in Gold Reserves:

• Gold reserves saw a notable increase of $2.3 billion, reaching $50.72 billion as of March 18, 2024.

4. Special Drawing Rights (SDRs) and IMF Reserves:

• SDRs increased by $31 million to $18.21 billion.
• Reserve position in the International Monetary Fund (IMF) rose by $19 million to $4.82 billion.