Country's Foreign Exchange Reserves Increase to USD 595.1 Billion

According to the RBI data, gold holdings in the reserves decreased by USD 472 million in the week ending June 30.

Country's Foreign Exchange Reserves Increase to USD 595.1 Billion

The foreign exchange reserves of the country have once again witnessed an increase, reaching USD 595.1 billion in the week ending June 30, according to data released by the Reserve Bank of India (RBI) on Friday. This follows a similar growth in the first week of June, highlighting the continuous strengthening of the country's forex reserves.

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The weekly data published by the RBI reveals a notable increase in the foreign exchange sector. Foreign exchange assets rose by USD 2.5 billion during the week ending June 30, bringing the total amount of foreign exchange reserves to USD 528 billion. The calculation of foreign currency holdings accounts for the appreciation or depreciation of non-US currencies such as the euro, pound, and yen when expressed in dollar terms.

However, there has been a noticeable decline in the gold component of the foreign exchange reserves. According to the RBI data, gold holdings in the reserves decreased by USD 472 million in the week ending June 30. Consequently, the total amount of gold held in the forex reserves has decreased to USD 43.8 billion. Additionally, the country's reserves position with the International Monetary Fund (IMF) also experienced a decline of USD 118 million, standing at USD 5 billion during the reporting week.

It is worth mentioning that in October 2021, the country's foreign exchange reserves reached a record figure of USD 645 billion, marking the highest level achieved thus far. Experts attribute the current fluctuations in reserves to the pressure faced by the rupee due to global developments. The central bank of the country utilizes forex reserves to shield the rupee from this pressure, leading to fluctuations in the accumulated wealth. Consequently, the amount of assets held in foreign currency reserves fluctuates, sometimes increasing consecutively for several weeks, while other times experiencing consecutive decreases.

In general, the Reserve Bank of India intervenes in the market through liquidity management, including dollar sales, as per the prevailing circumstances. This approach helps prevent a sharp depreciation of the rupee and ensures stability in the forex market.