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In a remarkable feat, India’s foreign exchange reserves have soared to an unprecedented high, reaching USD 642.49 billion in the week ending on March 15, as revealed by the latest data released by the Reserve Bank of India (RBI). This marks the fourth consecutive week of growth, with the forex reserves witnessing an impressive increase of USD 6.396 billion during this period.
The surge in reserves is primarily attributed to the rise in India’s foreign currency assets (FCA), the largest component of the forex reserves. The FCA witnessed a substantial uptick of USD 6.034 billion, reaching USD 568.386 billion, according to the central bank’s weekly statistical data. Additionally, gold reserves also experienced a notable rise from USD 425 million to USD 51.140 billion during the same week.
This significant accumulation of reserves underscores India’s strengthened position in the global economic landscape. Notably, in the calendar year 2023 alone, the RBI augmented the foreign exchange kitty by approximately USD 58 billion, reflecting robust economic resilience.
However, this remarkable achievement comes on the heels of a challenging period in 2022 when India’s forex reserves witnessed a cumulative decline of USD 71 billion. The decline was largely attributed to factors such as the increased cost of imported goods and the RBI’s intermittent intervention in the market to stabilize the rupee’s value against the US dollar.
The RBI’s intervention in the foreign exchange market is aimed at maintaining orderly market conditions and curbing excessive volatility in the exchange rate. While the central bank closely monitors forex markets, its interventions are guided by the objective of ensuring stability without adhering to predetermined target levels.
India’s foreign exchange reserves, often denominated in reserve currencies like the US Dollar, Euro, Japanese Yen, and Pound Sterling, serve as a crucial buffer to mitigate external vulnerabilities and uphold financial stability in the country.
