Finance
The Reserve Bank of India’s (RBI) foreign exchange reserves increased by $2.9 billion in the week ending December 9 to $564.07 billion. This is the fifth week in a row that the central bank’s reserves have increased.
The previous week’s increase was primarily due to an increase in the RBI’s foreign currency assets, which increased by $3.1 billion to $500.13 billion, according to the most recent data. According to the data, the RBI’s gold reserves fell by $296 million to $40.73 billion in the week ending December 9.
The rupee fell 1.2 percent against the US dollar in the week ending December 9, ending at 82.28. So far in 2022, the rupee has fallen 10.3% against the US dollar.
The RBI’s reserves have increased significantly over the last five weeks, despite a sharp drop in the US dollar index.
The reserves increased by $11.02 billion to $561.16 billion in the week ending December 2, the highest level since August 26. The reserves stood at $531.08 billion as of October 28.
Analysts believe the increase in the RBI’s reserves is due to revaluation as well as the central bank’s purchases of the US dollar to replenish its reserves.
In order to avoid excessive volatility in the rupee’s exchange rate, the RBI’s reserves fell sharply in 2022, owing in part to dollar sales by the central bank.
The rupee has experienced bouts of volatility this year as a result of Russia’s invasion of Ukraine and the US Federal Reserve’s subsequent aggressive rate hikes.
The RBI’s reserves were $631.35 billion on February 25, around the time of the invasion. This triggered a global flight of capital to the safety of the US dollar.
According to the RBI, reserves worth $530 billion as of November 4 covered 8.6 months of imports projected for the current fiscal year.
Source:BS
