Finance
India’s foreign exchange (Forex) reserves increased for the third week in a row, reaching a new lifetime high of $670.86 billion as of July 19, according to the latest statistics issued by the RBI on Friday.
The reserves increased by $4 billion this week after rising by a total of $14.9 billion in the previous two weeks.
An increase in forex reserves indicates the economy’s strong fundamentals and allows the RBI more room to manage the currency when it becomes volatile.
A big Forex fund allows the RBI to intervene in the spot and forward currency markets by issuing additional dollars to keep the rupee from falling sharply.
Conversely, a shrinking Forex fund gives the RBI less room to operate in the market to support the rupee.
RBI Governor Shaktikanta Das recently stated that India’s foreign sector remains resilient, and the central bank is confident in servicing the country’s external finance needs easily.
According to RBI data released on June 24, India’s Current Account Deficit (CAD) fell to $23.2 billion (0.7 percent of GDP) in 2023-24 from $67.0 billion (2.0 percent of GDP) the previous year, owing to a lower merchandise trade deficit, which reflects a strong external balance position.
The RBI data also revealed that India’s CAD posted a surplus of $5.7 billion (0.6 percent of GDP) in the January-March quarter (Q4) of 2023-24 as against a deficit of $8.7 billion (1.0 per cent of GDP) in the preceding October-December quarter of 2023-24.
