Finance
After four weeks of declines, the Reserve Bank of India’s foreign exchange reserves increased by $1.5 billion in the week ended March 3 to $562.4 billion.
The increase was largely due to an increase in the RBI’s foreign currency assets, which increased by $1.2 billion in the last week to $497.1 billion, according to the most recent central bank data.
The rupee gained 1% against the US dollar in the week ending March 3 as corporate and foreign investment flows boosted the local currency.
Following sharp increases in November and December, the RBI’s reserves fell for the majority of February. The rupee experienced volatility in February as renewed concerns about US Federal Reserve rate hikes caused the US dollar to strengthen. In order to reduce excessive volatility in the exchange rate, the RBI intervenes in the domestic currency market through dollar sales or purchases.
According to the central bank’s February Bulletin, reserves worth $576.8 billion as of January 27, 2023, cover 9.4 months of projected imports for the current fiscal year.
From June to October 2022, the RBI was a net seller of US dollars in the currency market as the central bank sought to reduce excessive volatility in the rupee’s exchange rate in the midst of the Ukraine war and aggressive rate hikes by the Federal Reserve. The foreign exchange reserves increased by $28.9 billion since September-end to $561.6 billion as on January 6.
Source:BS
