New Delhi, Jan 16 (NationPress) India's foreign exchange reserves experienced an uptick of $392 million, reaching $687 billion for the week ending January 9, as reported by the Reserve Bank of India (RBI) on Friday.

The central bank highlighted that the value of gold reserves, a significant element of the foreign exchange reserves, rose by $1.56 billion to $112.83 billion during the same week.

A contributing factor to this increase in gold reserves is the notable rise in gold prices. International gold prices surged by approximately 2.5 percent over the past week and have increased by about 5.5 percent in the last month.

Meanwhile, the value of Foreign Currency Assets (FCA), which is the largest segment of the foreign exchange reserves, saw a decline of $1.12 billion, settling at $550.86 billion. FCA includes not just the dollar but also other significant global currencies such as the yen, euro, and pound, all valued in dollars.

As per the RBI, the value of Special Drawing Rights (SDRs) dipped by $39 million to $18.73 billion in the week that ended January 9. Additionally, the reserve position in the IMF decreased by $13 million to $4.758 billion.

Foreign exchange reserves are crucial for any nation as they reflect the overall economic health and play a vital role in stabilizing the exchange rate.

For instance, if the rupee faces downward pressure against the dollar, the central bank can utilize its foreign exchange reserves to mitigate further depreciation and uphold exchange rate stability.

A rise in foreign exchange reserves signals a robust inflow of dollars into the nation, thereby bolstering the economy. Additionally, increased reserves facilitate international trade.