India’s foreign exchange reserves rose by $1.46 billion to $562.4 billion as of March 3, arresting the four successive weeks of fall, the said.
The forex reserves had fallen by $15.8 billion during the preceding four weeks. In the previous week ending February 24, the reserves had declined by $325 million to $560.942 billion, and the week before by a whopping $5.68 billion, showed the Reserve Bank of India (RBI) data.
The worst drop was in the week to February 10 when the reserves plunged by a steep $8.32 billion to $566.95 billion.
The reserves have been falling as the rupee has been under pressure and the monetary authority has been taking measures to defend the currency from extreme volatility. In 2022, the cost of defending a falling rupee was over $115 billion of the reserves.
In October 2021, the forex kitty had reached an all-time high of $645 billion.
During the week ending March 3, the accretion was primarily due to the increase in the value of the foreign currency assets, the largest component of the reserves, to the tune of $1.2 billion to $497.1 billion, according to the Weekly Statistical Supplement released by the RBI on Friday.
This led to a revaluation of the foreign assets and dollar buying by the central bank.
During the reporting week, the rupee strengthened against the American dollar by almost 1% as domestic and overseas investment flows boosted the unit.
The latest forex inflow was led by the US private equity fund GQG pumping in $1.9 billion in to the troubled Adani group. The inflow came after around $800 billion of FPI (Foreign Portfolio Investors) selling in equities and debt.
Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Gold reserves gained by $28.2 million to reach $41.79 billion.
The Special Drawing Rights (SDRs) fell $18 million to $18.10 billion.
The country’s reserve position with the IMF was down $36 million to $5.062 billion in the reporting week, according to the RBI data.
