India's foreign exchange reserves have surged to a near five-month high, reflecting increased foreign investment and a strengthening rupee. Here's a breakdown of the key details:
Key Highlights:
- Reserves Climbed: India's foreign exchange reserves rose for the fourth consecutive week, reaching USD 665.4 billion as of March 28.
- Significant Increase: The reserves increased by USD 6.6 billion in the latest reporting week, following a total rise of USD 20.1 billion over the previous three weeks.
- Rupee Gains: The Indian rupee gained 0.6 per cent over the week, supported by the return of foreign investors to Indian stock markets.
Factors Influencing the Reserves:
Changes in the reserves are primarily influenced by:
- The central bank’s activities in the currency market (buying or selling).
- Fluctuations in the value of foreign assets held by the central bank.
Rupee's Performance:
In recent months, the rupee faced downward pressure due to foreign money outflows and a strong US dollar. However, with the reversal of these trends, the rupee has shown recovery:
- The rupee ended the week at 85.2350 per US dollar, up 0.3 per cent from the previous week.
- Over the last two weeks, the rupee has gained about 2 per cent overall.
Composition of India’s Forex Reserves:
India’s forex reserves include:
- Foreign currency assets
- Gold holdings
- Reserve Tranche Position with the International Monetary Fund