India’s foreign exchange reserves stood at $604 billion for the week ending December 1, said Reserve Bank of India’s Governor Shaktikanta Das during the bi-monthly MPC meet. Forex reserves surpassed the $600 billion mark after a gap of about four months.
Earlier, the foreign exchange reserves surged by $2.54 billion to $597.94 billion for the week ending November 24.
The governor further said the Indian rupee has exhibited low volatility compared to emerging market economy (EME) peers in the calendar year 2023, despite elevated US treasury yields and a stronger US dollar.
According to the Weekly Statistical Supplement released by the RBI, Foreign currency assets (FCAs) increased by $5.08 billion to $533.61 billion. Expressed in dollar terms, the FCAs 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 were up by $991 million to $47.33 billion, while SDRs expanded by $32 million to $18.25 billion.
Reserve position in the IMF increased by $5 million to $4.85 billion.
It can be noted that in October 2021, the country’s forex kitty had reached an all-time high of USD 645 billion. The reserves have been declining as the central bank deploys the kitty to defend the rupee amid pressures caused majorly by global developments.
On the financing side, foreign portfolio investment (FPI) flows have seen a significant turnaround in 2023-24 with net FPI inflows of USD 24.9 billion (up to December 6) as against net outflows in the preceding two years.
Typically, the RBI, from time to time, intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.
The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band
