Home / Business and Economy / India's Forex Reserves Hit Record High Amid RBI Moves
India's Forex Reserves Hit Record High Amid RBI Moves
20 Feb
Summary
- Forex reserves reached an all-time high of $725.727 billion.
- Reserves increased due to RBI's market interventions and gold purchases.
- Adequate reserves cover nearly one year of goods imports.
India's foreign exchange reserves achieved an all-time high of $725.727 billion in the week ending February 13, marking a $8.66 billion increase from the previous week. This surge is attributed to market interventions by the Reserve Bank of India (RBI), including the purchase and sale of foreign currency. The reserves' components saw significant growth, with foreign currency assets rising by $3.55 billion and gold reserves by $4.99 billion.
The RBI reported purchasing $18.33 billion and selling $28.35 billion in foreign currency during December. These robust foreign exchange reserves provide substantial security, offering cover for approximately one year of goods imports and nearly 96% of external debt. While foreign currency assets maintain the largest share, gold's proportion in reserves increased due to valuation effects.
Concurrently, the Indian Rupee experienced a rebound, recovering from January lows. This recovery followed positive foreign portfolio investments, influenced by trade agreements with the EU and interim deals with the US. The Rupee had previously depreciated in January due to outflows and trade deal uncertainties.
