IANS | 12 Apr, 2024
India's foreign exchange reserves went up by $2.98 billion during the
week ended April 5 to scale a new all-time high of $648.562 billion,
data released by the RBI showed on Friday.
This is the seventh
consecutive week marking a jump in the overall reserves. The forex kitty
had increased by $2.95 billion during the preceding week ended March
29, after notching a cumulative $26.5 billion rise in the previous five
weeks.
Gold reserves, which also form part of the forex kitty held
by the RBI, shot up by $2.398 billion to $54.558 billion during the
latest week, while foreign currency assets increased by $549 million.
The Special Drawing Rights (SDRs) were up by $24 million to $18.17 billion.
RBI
Governor Shaktikanta Das referred to the record foreign exchange
reserves as a reflection of the strength of the Indian economy.
"It
is our prime focus to build a strong umbrella, a strong buffer in the
form of a substantial quantum of forex reserves which will help us when
the cycle turns, or when it rains heavily," Das said while unveiling the
first monetary policy review of the current financial year that began
on April 1.
Rising foreign exchange reserves are a positive sign
for the economy as they reflect an ample supply of dollars that help
strengthen the rupee.
An increase in the foreign exchange
reserves gives the RBI more headroom to stabilise the rupee when it
turns volatile. This is because the RBI intervenes in the spot and
forward currency markets by releasing more dollars to prevent the rupee
from heading for a free fall.
Conversely, a declining forex kitty leaves the RBI less space to intervene in the market to prop up the rupee.
India's
forex reserves, including the central bank's forward holdings, can now
cover more than 11 months of imports, which is a two-year high.
The
RBI Governor also said the Indian rupee remained largely range-bound as
compared to both its emerging market peers and a few advanced economies
during 2023-24 and was the most stable among the major currencies
during this period.
“The depreciation of Indian rupee at 1.4 per
cent against the US dollar in 2023-24 was lower as compared to emerging
market peers like Chinese yuan, Thailand baht, Indonesian rupiah,
Vietnamese dong, Malaysian ringgit and a few advanced economy currencies
like Japanese yen, Korean won and New Zealand dollar,” he said.
