Finance
The Reserve Bank of India’s (RBI) foreign exchange reserves increased by $2.9 billion in the week ended November 25, according to the most recent central bank data.
This is the third week in a row that the RBI’s reserves have increased.
The increase in reserves last week was due to an increase in the RBI’s foreign currency assets, which increased by $3 billion to $487.29 billion, according to the data.
The rupee was flat against the US dollar in the week ending November 25. The Indian rupee, on the other hand, increased by 1.7 percent in the previous month.
With the US dollar’s strength now waning, many economists believe the RBI’s reserves could see revaluation gains in the coming months, as well as higher returns on its foreign reserves holdings due to higher global interest rates.
US government bonds account for a sizable portion of the RBI’s reserves.
When the Ukraine war broke out in late February, the RBI’s reserves were around $631 billion. The conflict, combined with the US Fed’s tightening cycle, pushed global funds toward the dollar, putting pressure on emerging market currencies like the rupee. As a result, the RBI sold dollars from its reserves to avoid excessive volatility in the exchange rate.
The Reserve Bank of India said earlier this month that reserves totaling $530 billion were equivalent to 8.6 months of projected imports for the current fiscal year. In September 2021, reserves were sufficient to cover nearly 15 months of imports.
Souirce:BS
