India's Forex Reserves Rise for Eighth Consecutive Week

India's foreign exchange reserves increased by USD 1.983 billion, reaching USD 688.129 billion as of April 25, marking eight weeks of continual growth. Forex reserves are still below their peak of USD 704.885 billion in September. The Reserve Bank of India's interventions have helped stabilize the Rupee amid currency fluctuations.

India's foreign exchange reserves experienced an upswing of USD 1.983 billion, reaching a total of USD 688.129 billion during the week concluding on April 25. This marks the eighth consecutive week of gains, according to the latest figures released by the Reserve Bank of India (RBI). Notably, the reserves remain below their peak from September last year, when they hit an unparalleled USD 704.885 billion.

The data provided by the RBI highlights an increase in foreign currency assets (FCAs) by USD 2.168 billion, summing up to USD 580.663 billion. FCAs stand as the primary component of India's Forex reserves and reveal the valuation impact of non-US currencies such as the Euro, Pound, and Yen converted into dollar terms.

Concurrently, the gold reserves with the RBI fell by USD 207 million, settling at USD 84.365 billion. However, the Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) registered a USD 21 million increase, reaching USD 18.589 billion. The reserves had reported a previous rise of USD 8.310 billion, amounting to USD 686.145 billion by April 18.

After achieving an all-time high of USD 704.89 billion in September, India's forex reserves declined possibly due to RBI interventions aimed at preventing severe rupee depreciation. As the Indian Rupee reaches historical lows against the US dollar, the apex bank estimates that the reserves are sufficient for covering 10-12 months of projected imports.

During 2023, India augmented its foreign exchange reserves by about USD 58 billion, contrasting a USD 71 billion drop in 2022. So far, 2024 has seen an increase of over USD 20 billion. These reserves, primarily held in reserve currencies like the US Dollar with smaller portions of Euro, Yen, and Sterling, play a crucial role in maintaining economic stability. The RBI frequently manages liquidity, buying dollars to anchor the Rupee and selling when it is vulnerable.