India's Foreign Exchange Reserves Rise for the Third Week

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India's Foreign Exchange Reserves Rise for the Third Week

Synopsis

India's foreign exchange reserves have increased for the third consecutive week, rising by $7.6 billion to total $638 billion as of February 7, according to the Reserve Bank of India. This upward trend reflects sustained capital inflows and a stronger external position.

Key Takeaways

  • Forex reserves increased by $7.6 billion.
  • Total reserves reached $638 billion as of February 7.
  • Third consecutive week of growth in reserves.
  • Gold reserves rose by $1.3 billion to $72.20 billion.
  • RBI cut repo rate by 25 basis points to 6.25%.

Mumbai, Feb 15 (NationPress) India’s foreign exchange reserves have surged by $7.6 billion, reaching $638 billion as of February 7, based on the latest figures from the Reserve Bank of India (RBI).

This marks the third consecutive week of growth in these reserves, following an increase of $1.05 billion the prior week, which brought the total to $630.607 billion as of January 31.

India’s forex reserves peaked at an all-time high of $704.885 billion in September of last year. In 2023, the country witnessed a notable rebound in its forex reserves, gaining around $58 billion.

This upward trajectory has persisted into 2024, with reserves climbing by over $20 billion thus far, indicating sustained capital inflows and a robust external position.

For the week ending February 7, foreign currency assets, which constitute a major part of the total reserves, rose by $6.422 billion to $544.106 billion, as disclosed in data released on Friday.

Additionally, gold reserves experienced a significant boost, rising by $1.3 billion to reach $72.20 billion.

The RBI procured another 8 tonnes of gold in November 2024, as central banks globally continued their purchasing spree, collectively acquiring 53 tonnes of the precious metal during the month, according to the latest World Gold Council (WGC) report.

The total gold holdings now stand at 876 tonnes, keeping India as the second largest buyer this year, following Poland.

In the meantime, the central bank made a pivotal policy decision by cutting the repo rate by 25 basis points to 6.25 percent during the recent Monetary Policy Committee (MPC) meeting — marking the first rate cut in five years.

The apex bank utilizes the forex reserves to mitigate volatility in the rupee, which can result from capital flight when foreign investors sell shares in the stock market.