India’s foreign exchange reserves saw a significant increase of $9.063 billion in the initial week of April, bouncing back from the previous week’s decline. The country’s forex reserves reached $697.121 billion by April 3, following a notable drop of $10.288 billion in the prior week ending March 27.
The surge in reserves was propelled by gains in various components of the reserve basket. Gold reserves notably rose by $7.221 billion, reaching a total value of $120.742 billion. Foreign currency assets (FCA), the primary component of the reserves, also saw an uptick of $1.784 billion, totaling $552.856 billion as per the central bank’s data.
Furthermore, special drawing rights (SDRs) experienced a slight increase of $58 million, reaching $18.707 billion during the week. India’s reserve position with the International Monetary Fund remained steady at $4.816 billion.
Despite recent fluctuations, India’s forex reserves remain below their peak of $728.494 billion, set in the week ending February 27, before the West Asia crisis-induced depletion. Foreign exchange reserves are crucial for economic stability, aiding the central bank in managing currency fluctuations and facilitating smooth external trade.
A robust reserve position empowers the RBI to intervene in the currency market to stabilize the rupee amidst volatility, reflecting sustained foreign currency inflows into the economy. Earlier data from the RBI indicated that by the week ending February 27, India’s forex reserves had surged by $4.885 billion to hit an all-time high of $728.494 billion.
