India’s Foreign Exchange Reserves Reach Highest Level in More Than Two Years

India’s foreign exchange reserves experienced a significant boost, increasing by $10.470 billion to reach $636.095 billion in the week ending March 8, according to recent figures from the Reserve Bank of India (RBI). This uplift marks the third consecutive week of gains, propelling the reserves to their highest level in more than two years.

In the week leading up to March 8, the reserves saw a significant increase of $6.554 billion, climbing to $625.626 billion. The latest surge can be largely attributed to an increase in India’s foreign currency assets (FCA), which are a major portion of the foreign exchange reserves. These assets saw an increase of $8.21 billion, totaling $562.352 billion, as per the RBI’s weekly statistical update.

However, it wasn’t all upward trends; the gold reserves witnessed a decrease of $2.299 billion, settling at $50.716 billion. Throughout 2023, the RBI has successfully augmented its foreign exchange reserves by approximately $58 billion. This was a recovery from 2022, when there was a cumulative drop of $71 billion in the reserves.

Foreign exchange reserves, or FX reserves, are vital assets held by a country’s central bank or monetary authority. They are primarily kept in major reserve currencies, including the US Dollar, and to a lesser extent, the Euro, Japanese Yen, and Pound Sterling.

India’s foreign exchange reserves reached an all-time peak of around $645 billion in October 2021. Since then, despite a marginal overall decrease, significant factors have been the heightened cost of imported goods in 2022 and the RBI’s strategic market interventions. These interventions were aimed at managing liquidity, including selling dollars to mitigate sharp depreciations in the rupee against a strengthening US dollar.

The RBI diligently monitors the forex market, stepping in to ensure stability and to curb undue fluctuations in exchange rates. Its actions are guided by the need to maintain orderly market conditions, rather than adhering to any fixed target levels or ranges.

Also Read: Adidas Reports Its First Downturn in Three Decades Yet Maintains Dividend Commitment