India's foreign exchange reserves have reached a historic high of $648.562 billion, marking the seventh consecutive week of growth, according to recent data released by the Reserve Bank of India (RBI). Prior to the week ending on April 5, the reserves stood at $645.583 billion.
The largest component of the forex reserves, foreign currency assets (FCA), climbed by $549 million to $571.166 billion, as per the central bank's weekly statistical data. Gold reserves also saw an increase during the week, rising by $2.398 billion to $54.558 billion.
In the calendar year 2023, the RBI bolstered the foreign exchange reserves by approximately $58 billion. Conversely, in 2022, India's forex reserves experienced a cumulative decline of $71 billion.
So far in 2024, the forex reserves have surged by approximately $28 billion on a cumulative basis.
Forex reserves, also known as foreign exchange reserves (FX reserves), are assets held by a nation's central bank or monetary authority. These reserves are typically held in reserve currencies, predominantly the US Dollar, and to a lesser extent, the Euro, Japanese Yen, and Pound Sterling.
India's foreign exchange reserves last reached their all-time high in October 2021. The subsequent decline could be attributed to the increased cost of imported goods in 2022. Additionally, fluctuations in forex reserves may be linked to the RBI's interventions in the market to stabilize the rupee's value against the US dollar.
The RBI closely monitors foreign exchange markets and intervenes as needed to maintain orderly market conditions, aiming to prevent excessive volatility in exchange rates. These interventions occur through liquidity management measures, including the sale of dollars, without a predetermined target level or band.
