India’s forex reserves hit record high

Mar22,2024



Mumbai: India's foreign exchange reserves rose for the fourth consecutive week to a record high of $642.49 billion as of March 15. Central bank The data was shown on Friday.
Reserves rose by $6.4 billion in the week under review, after rising by $20 billion in the previous three weeks.
The Indian economy is seen growing at 7.6% this year, one of the fastest pace among major economies Global economies. This helped attract $20.7 billion in foreign equity inflows in 2023 and $1.85 billion so far this year. Moreover, India's inclusion in global bond indices has crossed $10 billion since the end of September.
reserve Bank of India The Reserve Bank of India (RBI) has opted to absorb most of these inflows and increase its reserves to avoid a sharp rise in the rupee, analysts said.
A large reserve pile gives the central bank the ability to manage the currency during periods of market volatility.
from india foreign exchange reservesThe central bank's holdings, including forward holdings, can now cover more than 11 months of imports, a nearly two-year peak.
“India's external metrics remain healthy with adequate levels of reserves low current account deficit and low external debt levels,” Gaura Sen Gupta, economist at IDFC First Bank, said, adding that the current level of reserves is “more than adequate”, providing cover from external volatility.
Foreign exchange reserves were boosted by the maturity of a $5 billion dollar/rupee swap maturing on March 11.
“The increase in FX reserves was due to the maturity of RBI's $5 billion sell buy swap,” Sen Gupta said. “In addition, the RBI made additional dollar purchases of approximately $3 billion during that week.”
Changes in foreign currency assets are caused by RBI's foreign exchange market interventions as well as appreciation or depreciation of foreign assets held in reserves.
In the week of March 15, the rupee fell 0.1% against the dollar and traded between 82.6400 and 82.9525.
On Friday, the rupee closed at a record low of 83.4250, down 0.7% this week.



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