India's Forex Reserves Rebound Amid Exchange Rate Stability Efforts

India's forex reserves increase by USD 1.510 billion after continuous decline, as RBI data shows heightened reserves totalling USD 658.091 billion. Effective management by the Reserve Bank of India aids in stabilizing the Rupee amid global market volatility, bolstering economic resilience.

India's foreign exchange reserves have begun to rebound after experiencing a prolonged decline, marking an eighth consecutive week of reduction and hitting a multi-month low. The latest data from the Reserve Bank of India (RBI) reveals that the reserves climbed by USD 1.510 billion, reaching a total of USD 658.091 billion as of November 29.

This recovery comes after the reserves plummeted from a record high of USD 704.89 billion in September, primarily driven by efforts to prevent a steep depreciation of the Rupee. Such a buffer in foreign exchange reserves is crucial for safeguarding the domestic economy from global market disruptions.

Currently, India's foreign currency assets are the largest component of these reserves, standing at USD 568.852 billion. The gold reserves account for USD 66.979 billion, and the reserves now cover roughly one year of projected imports, according to the central bank's estimates.

In stark contrast to 2022, when there was a cumulative decline of USD 71 billion, India has added approximately USD 58 billion to its forex reserves in 2023. These reserves are largely held in reserve currencies, notably the US Dollar, with some portions in the Euro, Japanese Yen, and Pound Sterling.

The Reserve Bank of India continues to play a pivotal role in monitoring foreign exchange markets. It intervenes mainly to maintain orderly conditions and minimize excessive volatility in the Rupee's exchange rate, without targeting any specific level. The RBI's strategic interventions often involve managing liquidity by buying or selling dollars to stabilize the currency.

Over the past decade, the Indian Rupee has transitioned from being one of the most volatile currencies in Asia to one of the most stable. This stability has been achieved through the RBI's proactive measures of purchasing dollars when the Rupee strengthens and selling them during its weakness, thus making Indian assets more attractive to investors. (ANI)

(With inputs from agencies.)