India’s foreign exchange reserves rose by USD 1.46 billion to USD 562.4 billion as of March 3, arresting the four successive weeks of fall, the Reserve Bank of India said.
The forex reserves had fallen by USD 15.8 billion during the preceding four weeks. In the previous week ending February 24, the reserves had declined by USD 325 million to USD 560.942 billion, and the week before by a whopping USD 5.68 billion, showed the Reserve Bank of India (RBI) data.
The worst drop was in the week to February 10 when the reserves plunged by a steep USD 8.32 billion to USD 566.95 billion.
The reserves have been falling as the rupee has been under pressure and the monetary authority has been taking measures to defend the currency from extreme volatility. In 2022 the cost of defending a falling rupee was over USD 115 billion of the reserves.
In October 2021, the forex kitty had reached an all-time high of USD 645 billion.
During the week ending March 3, the accretion was primarily due to the increase in the value of the foreign currency assets, the largest component of the reserves, to the tune of USD 1.2 billion to USD 497.1 billion, according to the Weekly Statistical Supplement released by the RBI on Friday. This led to a revaluation of the foreign assets and dollar buying by the central bank.
During the reporting week, the rupee strengthened against the American dollar by almost 1per cent as domestic and overseas investment flows boosted the unit.
The latest forex inflow was led by the US private equity fund GQG pumping in USD 1.9 billion in to the troubled Adani group. The inflow came after around USD 800 billion of FPI (Foreign Portfolio Investors) selling in equities and debt.
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.
Gold reserves gained by USD 28.2 million to reach USD 41.79 billion.
The Special Drawing Rights (SDRs) fell USD 18 million to USD 18.10 billion.
The country’s reserve position with the IMF was down USD 36 million to USD 5.062 billion in the reporting week, according to the RBI data.