India's forex reserves rise by $5 billion to $595 billion
During the week ending November 17, India's foreign exchange reserves surged by $5.077 billion, reaching a total of $595.397 billion, as per the Reserve Bank of India (RBI). This increase follows a drop of $462 million to $590.321 billion in the previous week. In October 2021, India's forex reserves hit a record high of $645 billion before experiencing a decline due to the central bank's efforts to protect the Indian rupee from global pressures.
Foreign currency assets and gold reserves surge
The foreign currency assets (FCAs), a key part of the reserves, rose by $4.387 billion to $526.391 billion during the week ending November 17, according to the RBI's Weekly Statistical Supplement. FCAs, expressed in dollar terms, take into account the appreciation or depreciation of non-US currencies like the euro, pound, and yen held in the foreign exchange reserves. Gold reserves increased by $527 million to $46.042 billion during the same timeframe.
Special drawing rights and reserve position with IMF increase
The Special Drawing Rights (SDRs) also experienced growth, increasing by $120 million to reach $18.131 billion during the week ending November 17, based on RBI data. India's reserve position with the International Monetary Fund (IMF) expanded by $42 million to $4.833 billion in the reporting week. The central bank has been using its forex reserves to defend the rupee amid pressures primarily caused by global developments.
RBI intervenes to maintain orderly market conditions
The RBI closely watches the foreign exchange market and intervenes as necessary to maintain orderly market conditions and limit excessive volatility in the exchange rate. The RBI typically intervenes in the market through liquidity management, including selling dollars, to prevent a sharp depreciation in the rupee. This intervention has contributed to the decline in forex reserves since their all-time high in October 2021.
