Forex Update: India’s Foreign Exchange Reserves Jump $5.7 Billion To $622.47 Billion

India’s forex reserves jumped $5.736 billion to $622.469 billion for the week ended February 2, according to the latest RBI data. In the previous week, the overall reserves had increased by $591 million to $616.733 billion.

In October 2021, the country’s forex kitty had reached an all-time high of $645 billion. The reserves took a hit as the central bank deployed them to defend the rupee amid pressures caused majorly by global developments since last year. For the week ended February 2, the foreign currency assets, a major component of the reserves, increased by $5.186 billion to $55.331 billion, as per the data of RBI.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in foreign exchange reserves.

Gold reserves increased by $608 million to $48.088 billion during the week. Special drawing rights (SDRs) were down by $58 million to $18.19 billion, the central bank said.

India’s reserve position with the IMF was unchanged at $4.86 billion in the week.

The Rupee

Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP, said, “Good inflows into the country have kept the dollar-rupee exchange rate on the lower side the week ended February 9, but with the RBI buying dollars kept the pair above 83.00. Today, oil was the major buyer with flows continuing unabated, as in equities though there is a sell-off, in the debt segment there is sufficient buying to ensure dollar inflows.”

He added that the rupee moved in a range of 82.82 to 83.07 during the week with RBI not allowing any downside below 82.80. The rupee is expected to be in the range of 82.80 to 83.30 next week as inflows continue and oil and RBI buy the downside in the pair.