India's forex reserves surge by $4.4B to hit $690B
What's the story
India's foreign exchange reserves have seen a massive jump of $4.36 billion, taking the total to an impressive $693.32 billion for the week ending December 19. The data was released by the Reserve Bank of India (RBI) on Friday. This comes after a smaller increase of $1.689 billion in the previous week, which had taken the overall kitty to $688.949 billion at that time.
Asset growth
Foreign currency assets and gold reserves contribute to forex surge
The recent increase in India's forex reserves can be attributed to a rise in foreign currency assets and gold reserves. For the week ending December 19, foreign currency assets, the largest component of the reserves, rose by $1.64 billion to $559.42 billion. Meanwhile, the value of gold reserves also saw a significant jump of $2.62 billion during this period, taking their total value to an impressive $110.36 billion at that time.
SDR and IMF
Special Drawing Rights and IMF position also rise
Along with foreign currency assets and gold reserves, India's Special Drawing Rights (SDRs) and reserve position with the International Monetary Fund (IMF) have also seen a rise. For the week ending December 19, SDRs rose by $8 million to $18.74 billion while India's reserve position with the IMF increased by $95 million during this period.
Market intervention
RBI's role in maintaining forex stability
The RBI plays a key role in keeping India's forex market stable. The central bank regularly monitors foreign exchange market developments and intervenes when necessary to maintain orderly conditions. The interventions are aimed at curbing excessive rupee volatility and are not based on any predetermined exchange rate target or band. This ensures that the country's external sector remains resilient amid global uncertainties and robust investment demand.