Mumbai, April 18 (IANS) India’s foreign exchange reserves rose by $1.57 billion to $677.84 billion for the week ended April 11, according to the weekly data released by the RBI on Friday.
This is the sixth straight week in which the country’s forex kitty has recorded an increase. The foreign exchange reserves had surged by $10.8 billion to $676.3 billion during the preceding week ended April 4.
For the week ended April 11, foreign currency assets, a major component of the reserves, rose by $892 million to $574.98 billion, the data released on Friday showed.
Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
The portion of the forex kitty held in gold, surged by $638 million to $79.997 billion during the week as the central banks worldwide have bought the precious metal as a safe haven bet amid geo-economic uncertainties.
The Special Drawing Rights (SDRs) were down $6 million at $18.356 billion, the apex bank said.
India’s reserve position with the IMF was up $43 million at $4.502 billion in the reporting week, the apex bank data showed.
The declining trend of earlier weeks due to revaluation and forex market interventions by the RBI to help reduce volatility in the rupee has now been reversed in the last six weeks.
Earlier, the country’s forex reserves had increased to an all-time high of $704.885 billion in September 2024.
Any strengthening of the country’s foreign exchange kitty also helps bolster the rupee vis-à-vis the US dollar which is good for the economy. With the recent increase in foreign exchange reserves the rupee has also emerged stronger.
An increase in the foreign exchange reserves reflects strong fundamentals of the economy and gives the RBI more headroom to stabilise the rupee when it turns volatile.
A strong forex kitty enables the RBI to intervene in the spot and forward currency markets by releasing more dollars to prevent the rupee from going into a free fall.
Conversely, a declining forex kitty leaves the RBI less space to intervene in the market to prop up the rupee.
Meanwhile, India’s merchandise trade deficit has narrowed to an over 3-year low at $14.05 billion in February from $22.99 billion in January as exports held steady during the month while imports declined, according to the latest data compiled by the Ministry of Commerce and Industry.
This reflects a strengthening of the external sector of the economy despite geopolitical tensions triggering economic uncertainty in the world market.
–IANS
sps/na
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