India’s Foreign Exchange Reserves Surge to 20-Month High, Hitting $615.971 Billion

India's Foreign Exchange Reserves Surge to 20-Month High, Hitting $615.971 Billion

VoM News Desk | December 22, 2023 | 10:14 PM IST | Breaking News | Follow on Google News

India’s Foreign Exchange Reserves Surge to 20-Month High, Hitting $615.971 Billion

India’s Foreign Exchange Reserves Surge to 20-Month High, Hitting $615.971 Billion

India’s foreign exchange reserves witnessed a significant surge of USD 9.112 billion, reaching USD 615.971 billion in the week ending December 15, 2023. This surge stands among the highest recorded in a week and marks a peak not seen in 20 months, as per data released by the Reserve Bank of India (RBI) on Friday.

Comprising cash, bank deposits, bonds, and other financial assets held in currencies other than the Indian rupee, India’s foreign exchange reserves play a crucial role in enabling central banks in emerging markets to stabilize their currencies amid volatile periods by providing dollars to the market.

The data from the RBI’s weekly statistical update revealed a substantial increase of USD 8.349 billion in India’s foreign currency assets (FCA), the largest component of its forex reserves, totaling USD 545.048 billion. FCA encompasses the impact of fluctuations in non-US currencies such as the euro, pound, and yen held within the reserves.

Additionally, gold reserves observed a rise of USD 446 million during the same week, reaching USD 47.577 billion.

Before the week ending December 15, India’s overall foreign exchange reserves had already climbed from USD 606.859 billion by USD 2.816 billion. While India’s foreign exchange reserves touched an unprecedented high of approximately USD 645 billion in October 2021, a subsequent decline in reserves was influenced by increased import costs in 2022. The decline also resulted from the Reserve Bank of India’s interventions to mitigate the rupee’s depreciation against the surging US dollar.

Forex reserves, or foreign exchange reserves, are assets held by a nation’s central bank in reserve currencies, primarily the US Dollar, along with the Euro, Japanese Yen, and Pound Sterling. These reserves serve as backing for the country’s liabilities, including the native currency issued, along with reserves deposited by financial institutions or the government with the central bank.

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