India’s foreign exchange reserves surged by a record $44.903 billion in the week ended September 4, taking the country’s forex kitty to a fresh lifetime high of $785.706 billion, according to data released by the Reserve Bank of India on Friday.The latest increase follows a $11.475-billion rise in the previous reporting week, when reserves had reached $740.803 billion. The latest weekly gain is the biggest on record and takes the reserves more than USD 44 billion above the previous week’s level.The reserves had been under pressure earlier this year as the rupee weakened amid the conflict in West Asia, prompting the RBI to intervene in the foreign exchange market through dollar sales.The trend reversed after the central bank introduced concessional forex swap measures in June to boost foreign-currency inflows and strengthen liquidity in the forex market. The measures have since attracted more than USD 136 billion in new flows.
Foreign currency assets drive increase
Foreign currency assets, the largest component of India’s forex reserves, rose by USD 47.498 billion during the week to USD 648.168 billion, RBI data showed.Foreign currency assets are expressed in US dollar terms and include the impact of appreciation or depreciation in non-US currencies such as the euro, pound and yen held in the reserves.The latest jump also comes after the RBI closed its special foreign-currency deposit window a month ahead of schedule following strong mobilisation by banks. As of August 31, Foreign Currency Non-Resident (Bank), or FCNR(B), deposits had brought in USD 127.226 billion, while overseas foreign-currency borrowings and external commercial borrowings took total inflows under the measures to USD 136.377 billion.The FCNR(B) window, launched on June 8, was originally scheduled to remain open until September 30 but was closed on August 31 after the RBI said its objective had been achieved ahead of schedule.Meanwhile, despite the overall increase, the value of India’s gold reserves declined by$2.594 billion during the week to $113.816 billion.Special drawing rights (SDRs) with the IMF fell by $4 million to $18.806 billion, while India’s reserve position with the IMF increased by $2 million to $ 4.916 billion, the RBI said.
