India’s Forex Reserves Skyrocket by $15 Billion: A 3-Week High
Reserves Bounce Back After Volatile Months
NEW DELHI: India’s foreign exchange reserves have staged an impressive recovery, marking their largest weekly increase in over three years. The reserves soared by $15.27 billion in the week ending 7 March, bringing the total to $653.97 billion, as reported by the Reserve Bank of India (RBI).
A Welcome Rebound
- This substantial increase comes after months of turbulence, during which the reserves had been falling for nearly four months.
- Just recently, the reserves dipped to an 11-month low before fluctuating again.
- Despite the recent fluctuations, India’s reserves remain robust, estimated to cover around 10-11 months of anticipated imports.
Analyzing the Numbers
India’s foreign currency assets (FCA), which make up the bulk of forex reserves, amounted to $557.28 billion. Gold reserves were valued at $74.33 billion.
The Importance of Forex Reserves
- The RBI actively manages forex reserves by purchasing dollars when the Rupee strengthens and selling them when it weakens.
- These reserves, held in major global currencies like the US Dollar, Euro, Japanese Yen, and Pound Sterling, are vital for maintaining economic stability and managing exchange rate variations.
An Encouraging Start to 2023
In 2023, India has added approximately $58 billion to its reserves, a significant improvement compared to the $71 billion decrease in 2022. As of now, reserves have grown by over $20 billion in 2024.
The Effect of RBI Interventions
The decrease in forex reserves since their all-time high of $704.89 billion in September can be largely attributed to the RBI’s efforts to stabilize the Rupee, which is currently hovering near its all-time low against the US dollar.
