India's Forex Reserves Climb for the Sixth Week to $677.84 Billion

Mumbai, April 18 (NationPress) India's foreign exchange reserves have increased by $1.57 billion to $677.84 billion for the week ending April 11, as per the latest data released by the RBI on Friday.

This marks the sixth consecutive week that the country’s forex reserves have seen a rise. In the previous week ending April 4, the reserves had also surged by $10.8 billion to $676.3 billion.

For the week ending April 11, foreign currency assets, a key component of the reserves, increased by $892 million to $574.98 billion, as indicated by the data released on Friday.

When measured in dollar terms, these foreign currency assets account for the fluctuations in value of non-US currencies like the euro, pound, and yen held within the foreign exchange reserves.

The segment of the forex reserves held in gold rose by $638 million to $79.997 billion during the week, as global central banks have been accumulating the precious metal as a safe haven amid ongoing geo-economic uncertainties.

The Special Drawing Rights (SDRs) saw a decline of $6 million, standing at $18.356 billion, according to the apex bank.

India's reserve position with the IMF increased by $43 million to $4.502 billion in the reporting week, as revealed by the apex bank data.

The previous downward trend stemming from revaluation and forex market interventions by the RBI to mitigate volatility in the rupee has been reversed over the past six weeks.

Previously, the country’s forex reserves reached an all-time high of $704.885 billion in September 2024.

An increase in the foreign exchange reserves not only strengthens the rupee against the US dollar but also benefits the economy. With this recent growth in reserves, the rupee has also shown signs of strength.

A robust forex reserve reflects the strong fundamentals of the economy and provides the RBI with greater flexibility to stabilize the rupee during times of volatility.

A strong forex reserve allows the RBI to step in on the spot and forward currency markets by supplying more dollars to prevent the rupee from depreciating significantly.

In contrast, a diminishing forex reserve limits the RBI's ability to intervene effectively in the market to support the rupee.

Meanwhile, India’s merchandise trade deficit has reduced to an over 3-year low of $14.05 billion in February, down from $22.99 billion in January, as exports remained stable while imports decreased, according to the latest data from the Ministry of Commerce and Industry.

This demonstrates an improvement in the external sector of the economy, even amid geopolitical tensions causing economic uncertainty in global markets.