Finance
The Reserve Bank of India’s foreign exchange reserves increased by $12.8 billion in the week ended March 17, reaching $572.80 billion, the highest increase since the week ended November 11, 2022.
The RBI’s reserves are currently at their highest level since February 3, 2023.
The increase in reserves last week was primarily due to a significant increase in the RBI’s foreign currency assets, which increased by $10.49 billion to $505.35 billion, according to the most recent central bank data.
The rupee fell 0.6% against the US dollar in the week ending March 17. The previous week was a volatile one for the rupee due to the banking sector crisis in the United States, which caused sharp movements in the US dollar index.
While the safe-haven US dollar benefited from global risk aversion, expectations of the Federal Reserve slowing rate hikes in the face of financial sector turmoil weighed on the greenback.
“As of February 2023, India held the fifth largest foreign exchange reserves in the world. India’s foreign exchange reserves recorded a decline of US$ 11.7 billion in February 2023 and stood at US$ 560.0 billion as on March 10, 2023 covering more than nine months of imports projected for 2022-23,” the RBI staff wrote in the March 2023 Bulletin.
From February to September 2022, the RBI’s reserves fell by $100 billion, owing in part to dollar sales as the central bank sought to protect the rupee from excess volatility amid the Ukraine war and the Fed’s tightening cycle.
Source:BS
