India’s foreign exchange reserves have soared to an unprecedented $785.71 billion, marking a record weekly increase, primarily driven by the Reserve Bank of India’s strategic concessional forex swap initiatives aimed at stabilising the rupee.
Photograph: Willy Kurniawan/Reuters
Key Points
- India’s forex reserves reached a new lifetime high of $785.71 billion, marking a record weekly jump of $44.9 billion.
- The increase is attributed to the Reserve Bank of India’s concessional forex swap initiatives, which have attracted over $136 billion in new flows.
- Foreign currency assets, the largest component of the reserves, rose by $47.5 billion to $648.17 billion.
- The value of gold reserves decreased by $2.59 billion to $113.82 billion during the same week.
- The reserves had previously declined due to the conflict in West Asia and RBI intervention to support the rupee.
India’s forex reserves jumped by a record $44.9 billion to a new lifetime high of $785.71 billion during the week ended September 4, the RBI said on Friday.
In the previous reporting week, the overall reserves increased $11.47 billion to a new all-time high of $740.8 billion.
Factors Driving the Surge
The kitty had been declining since the start of the conflict in West Asia earlier this year, as the rupee came under pressure and the RBI had to intervene in the forex market through dollar sales.
However, the reserves started increasing since the RBI announced concessional forex swap initiatives in June this year amid a sharp depreciation in the local currency.
The move has yielded over $136 billion in new flows.
Components of the Reserves
For the week ended September 4, foreign currency assets, a major component of the reserves, increased $47.5 billion to $648.168 billion, the central bank’s data showed.
Expressed in dollar terms, foreign currency assets include the effects of appreciation or depreciation of non-US units, such as the euro, pound, and yen, held in the foreign exchange reserves.
Value of gold reserves decreased $2.59 billion to $113.82 billion during the week, the RBI said, adding that the special drawing rights (SDRs) were down by $4 million at $18.81 billion.
India’s reserve position with the IMF was up $2 million to $4.92 billion at the end of the reporting week, according to the apex bank’s data.
