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India’s Forex Reserves Surpass $600 Billion, Reach Nearly 15-Month High

Date: July 21, 2023

According to newsm, India’s foreign exchange reserves (INFXR=ECI) have reached an impressive milestone, surpassing $600 billion, marking the highest level in nearly 15 months, according to data from the central bank on Friday.

The forex reserves saw a notable increase for the third consecutive week, rising to a total of $609.02 billion as of July 14. This week witnessed the most substantial gain in four months, with reserves rising by $12.74 billion from the previous week. The prior two weeks also saw a combined increase of $3.08 billion.

Gaura Sen Gupta, India economist at IDFC FIRST Bank, highlighted that a significant portion of the week-on-week surge in forex reserves is attributed to revaluation gains due to the weakening of the U.S. dollar and a reduction in U.S. Treasury yields.

The changes in foreign currency assets, expressed in dollar terms, encompass the effects of appreciation or depreciation of other currencies held in the Reserve Bank of India’s (RBI) reserves.

Sen Gupta further explained that the rest of the rise is attributed to the RBI’s forex purchases in the spot foreign exchange markets. He added that the central bank intends to maintain the rupee in a tight range throughout the year.

Foreign investors have notably purchased a net amount of $16 billion in Indian equities over the last three months, according to data from the National Securities Depository Limited. This influx has provided the central bank with the opportunity to make purchases from the market and bolster the forex reserves.

As per Reuters’ calculations, the current level of forex reserves, combined with the RBI’s forward foreign exchange book of $19.3 billion, is sufficient to cover over 11 months of imports.

During the week for which the forex reserves data pertains, the rupee experienced its most impressive performance in four weeks, trading within the range of 81.9300 and 82.6550.

At the week’s end, the rupee closed at 81.9450, achieving a 0.1% increase for the week.

India’s substantial foreign exchange reserves position the country favorably in the global economic landscape and underscore its resilience amid evolving market dynamics.

Note: The above news is a creative representation based on the provided information. For precise and up-to-date details on India’s forex reserves, please refer to official sources and data from the central bank.

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