India’s Forex Reserves Surge for 3rd Straight Week
India’s foreign exchange reserves saw a significant increase of $7.6 billion, reaching $638 billion as of February 7, according to the latest data released by the Reserve Bank of India (RBI).
Mumbai: India’s foreign exchange reserves saw a significant increase of $7.6 billion, reaching $638 billion as of February 7, according to the latest data released by the Reserve Bank of India (RBI).
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This marks the third consecutive week of growth in the country’s forex reserves.
Sustained Growth in Forex Reserves
The recent rise follows a $1.05 billion increase in the previous week, which brought the total reserves to $630.607 billion as of January 31. India’s foreign exchange reserves had peaked at an all-time high of $704.885 billion in September 2022, and have continued to rebound significantly in 2023, with an increase of approximately $58 billion. The upward trajectory has persisted into 2024, with reserves rising by over $20 billion so far, reflecting strong capital inflows and a robust external position.
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Rise in Foreign Currency Assets and Gold Reserves
As per the latest data, foreign currency assets, which constitute a major portion of the total reserves, rose by $6.422 billion, reaching $544.106 billion. Gold reserves also saw a notable rise, increasing by $1.3 billion to reach $72.20 billion.
In November 2024, the RBI purchased an additional 8 tonnes of gold, contributing to the global trend of central banks buying precious metals. According to the World Gold Council (WGC), a collective 53 tonnes of gold were purchased globally in November. India’s total gold holdings now stand at 876 tonnes, making it the second-largest buyer of gold during the year, just after Poland.
RBI’s Policy Decision and Impact on Rupee
In addition to the growth in reserves, the Reserve Bank of India made a key monetary policy decision by cutting the repo rate by 25 basis points to 6.25 percent in the latest Monetary Policy Committee (MPC) meeting. This marks the first rate cut in five years, signaling the central bank’s approach to supporting the economy.
The RBI utilizes its forex reserves to manage volatility in the rupee, particularly during times when foreign investors sell shares, leading to capital outflows from the stock market.
