India’s foreign exchange reserves soared to a more than two-year peak, reaching $636.10 billion as of March 8, marking the third consecutive week of increase, according to data released by the central bank on Friday.
During the reporting week, reserves surged by $10.47 billion, marking the largest jump since the week ending July 14, 2023. This steady ascent brings reserves closer to their all-time high of $642.45 billion, recorded in September 2021.
The Reserve Bank of India (RBI) actively intervenes in the foreign exchange market to mitigate excessive volatility in the rupee. In the reported week, the RBI engaged in dollar purchases in the spot market, likely absorbing robust inflows from both debt and equity markets, traders noted.
The rise in reserves coincided with an increase in gold valuation, which reached $50.72 billion compared to $48.42 billion in the previous week. Notably, gold prices surged during the reporting period, with domestic prices in India, the world’s second-largest gold consumer, reaching a record high of 66,356 rupees per 10 grams on March 8.
Fluctuations in foreign currency assets are influenced by RBI interventions and changes in the valuation of foreign assets held in reserves. India’s foreign exchange reserves encompass various components, including the country’s reserve tranche position in the International Monetary Fund.
Throughout the reporting period, the rupee experienced a modest appreciation of 0.1% against the dollar, trading within a range of 82.7250 to 82.9275. The domestic currency closed at 82.8775 on Friday, marking a marginal decline of approximately 0.1% for the week, its first weekly dip since mid-February.