Finance
India’s foreign exchange reserves increased for the third week in a row to $609.02 billion as of July 14, the highest level in over 15 months, according to central bank statistics released on Friday.
They increased by $12.74 billion from the previous week, the largest gain in four months, after increasing by a total of $3.08 billion in the previous two weeks.
“A major portion of the week-on-week jump in forex reserves is driven by revaluation gains due to dollar weakness and reduction in US Treasury yields,” said Gaura Sen Gupta, India economist at IDFC FIRST Bank.
The changes in foreign currency assets, represented in dollars, include the impact of other currencies held in the Reserve Bank of India’s (RBI) reserves appreciating or depreciating.
The rest of the increase is attributable to the RBI’s forex purchases in the spot foreign exchange markets, according to Sen Gupta, who added that the central bank will hold the rupee in a narrow range this year.
According to data from the National Securities Depository Limited, foreign investors have purchased a net of $16 billion in Indian shares in the last three months, allowing the central bank to buy from the market and build reserves.
The current level of forex reserves, along with the RBI’s forward foreign exchange book of $19.3 billion, is sufficient to cover over 11 months of imports, Reuters’ calculations showed.
The rupee had its best week in four in the week covered by the FX reserves data. During the week, it ranged between 81.9300 and 82.6550.
The rupee ended at 81.9450 on Friday, up 0.1% for the week.
Source:BS
