Finance
According to figures issued by the Reserve Bank of India on Friday, India’s foreign exchange reserves increased to $616 billion in the week ending 15th December, the highest level since 25th March, 2022.
The reserves increased by $9 billion throughout the week, the second-highest weekly increase in the current fiscal year.
Total reserves climbed due to an increase in foreign currency assets of $8 billion last week.
“The main reason could be the fall in the dollar index. The entire amount should not be physical accumulation, however, looking at the liquidity condition right now, which is tighter than expected, there could be some physical accumulation also,” said Indranil Pan, chief economist at YES Bank.
The rupee gained 0.4% in the previous week due to a drop in the dollar index following the outcome of the US Federal Reserve meeting, which signaled the end of the rate increasing path and is projected to decrease interest rates three times in 2024. For the third week in a row, the US rate-setting committee opted to maintain benchmark interest rates steady at 5.25-5.5 percent.
“The imports have decreased and the crude oil prices softened. That is why we saw the surge,” a dealer at a state-owned bank said. “Additionally, there were inflows that further led to the increase in reserves,” he said.
Gold reserves rose by $446 million in the previous week, whereas special drawing rights (SDRs) increased by $135 million. The total reserves stood at $607 billion in the week ended 8th December.
Source:BS
