Our Bureau
Mumbai
India’s Foreign Exchange Reserves have seen a rapid rise for the week that ended on May 9. The Foreign Exchange Reserves rose by $4.553 billion to end at $690.61 billion for the week. This surge gave a sigh of relief as the country’s Forex reserves in the previous week had dropped by $2 billion reaching $686 billion. Last week’s fall ended an 8-week gaining streak that had led reserves to a six-month high.
As reported by the Reserve Bank of India, the Foreign Currency Assets rose by $196 million to $581.37 billion. Gold reserves also grew by $4.5 million to $86.33 billion during the week making it one of the major contributors to the overall growth.
Amidst these growths RBI also documented that there was a fall in special drawing rights (SDRs) which declined by $26 million to $18.53 billion, while India’s reserve position with the International Monetary Fund (IMF) fell by $134 million to $4.37 billion.
India’s Foreign Exchange Reserves is currently the fourth largest in the whole world ranking just behind China, Japan and Switzerland. The reserves have been surging high barring a slight bump last week. The Forex reserves peaked at an all-time high of $704.885 billion in end-September 2024 but then had a steep fall from which it now seems to recover.
A strong foreign exchange reserve helps the RBI in maintaining greater flexibility which later aids them to manage volatility in the currency markets. For India, it also bolsters Rupee against Dollar while showcasing great economic fundamentals. If the country continues to have a robust Forex reserve, it allows the Central Bank to intervene so that it restraints excessive depreciation of Rupee. But if it starts to decline it directly affects RBI’s ability to defend the currency in tough times.
