NEW DELHI: India’s foreign exchange reserves recorded their sharpest weekly gain in more than three years in the week ending 7 March. The exchange surged $15.27 billion to reach $653.97 billion, as per the latest data from the Reserve Bank of India (RBI).
This marks a strong rebound after months of volatility as the reserves had been declining for nearly four months, recently hitting an 11-month low before experiencing a series of fluctuations, gaining in some weeks and slipping in others.
Forex reserves have been on a downward trend since touching an all-time high of $704.89 billion in September, now standing about 7 per cent below that peak. The decline is largely attributed to the RBI’s interventions to stabilise the Rupee, which is currently hovering near its record low against the US dollar.
Breaking down the latest figures, India’s foreign currency assets (FCA), the largest component of forex reserves stood at $557.28 billion, while gold reserves totalled $74.33 billion.
Despite the recent ups and downs, India’s reserves remain healthy, estimated to cover around 10-11 months of projected imports. In 2023, the country added about $58 billion to its reserves, a stark contrast to the $71 billion decline seen in 2022. So far in 2024, reserves have risen by over $20 billion.
The RBI actively manages forex reserves by buying dollars when the Rupee strengthens and sells them when it weakens.
These reserves, majorly held in major global currencies like the US Dollar, Euro, Japanese Yen, and Pound Sterling, play a crucial role in safeguarding economic stability and managing exchange rate fluctuations.