IANS | 09 Feb, 2024
India’s foreign exchange reserves jumped by $5.7 billion to $622.5
billion for the week ended February 2, RBI data released on Friday
showed.
In the previous week, the overall reserves had increased by $591 million to $616.7 billion.
Rising
foreign exchange reserves are a positive for the economy as they help
strengthen the rupee. An increase in foreign exchange reserves props up
the marcoeconomic fundamentals and helps the RBI stabilise the rupee
when it turns volatile.
The RBI intervenes in the spot and forward
currency markets by releasing more dollars to prevent the rupee from
going into a free fall when it comes under pressure.
A sharp decline in the country’s forex kitty leaves the RBI less headroom to intervene in the market to stabilise the rupee.
