India’s Foreign Exchange Reserves Reach Five-Month High with $10 Billion Increase

India's Foreign Exchange Reserves Reach Five-Month High with $10 Billion Increase

According to recent reports, India’s foreign exchange reserves have seen a significant increase of 10 billion dollars, reaching a total of 572 billion dollars in the week ending January 13th. This marks a five-month high for the country’s Forex reserves, which stood at 561.58 billion dollars the previous week. The Reserve Bank of India (RBI) attributes the jump in reserves to its intervention in the market to defend the depreciating rupee against the surging US dollar.

The foreign currency assets, which make up the largest component of the Forex reserves, were up by 9.078 billion dollars to 505.51 billion dollars. Gold reserves also saw an increase of 1.106 billion dollars to 42.890 billion dollars. At the start of last year, India’s Forex reserves stood at around 633 billion dollars. However, the decline in reserves can be attributed to the rising cost of imported goods and the RBI’s intervention in the market to prevent a steep depreciation in the rupee.

It is worth noting that the country’s foreign exchange reserves have intermittently fallen for the past four months, with the recent jump being largely due to the RBI’s intervention in the market. The central bank occasionally intervenes in the market through liquidity management, including the selling of dollars, to prevent a steep depreciation in the rupee.

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