IANS | 08 Mar, 2024
India's foreign exchange reserves shot up by $6.55 billion to $625.63
billion for the week ending March 1, according to the latest data
released by the RBI on Friday.
The country’s foreign exchange
reserves had increased by $2.98 billion to $619.07 billion in the
preceding week ending February 23.
Rising foreign exchange
reserves are a positive for the economy, as they reflect an ample supply
of dollars that help strengthen the rupee. An increase in foreign
exchange reserves 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.
On the other hand, a
sharp decline in the country’s forex kitty leaves the RBI less headroom
to intervene in the market to prop up the rupee.
