India's forex reserves hit record high of $730B
What's the story
India's foreign exchange reserves have hit a new high of $729.33 billion, a jump of $12.42 billion from the previous week, according to the data released by the Reserve Bank of India (RBI). The rise in reserves is largely attributed to inflows from foreign currency assets and gold reserves, following recent measures taken by the RBI to boost forex inflows into the country.
Policy impact
Recent policy changes attract massive $72 billion inflows
The RBI's recent policy changes, including those related to FCNR(B) deposits, have attracted a whopping $72 billion in forex inflows.
These measures have played a major role in the latest surge of India's foreign exchange reserves.
The central bank and government also introduced several other steps last month to further boost these inflows into the country.
Reserve components
Foreign currency assets, gold reserves drive surge
The latest increase in India's forex reserves was largely driven by foreign currency assets, which rose by $9.482 billion to $591.333 billion during the week.
Gold reserves also contributed significantly to this surge, rising by $2.801 billion to $114.218 billion during the same period.
Special drawing rights (SDRs) rose by $112 million to $18.852 billion while India's reserve position with International Monetary Fund (IMF) increased by a modest $26 million to $4.925 billion during the period under review.
Historical comparison
Reserves surpass previous record set in February
The latest surge in India's forex reserves takes them $38.221 billion above their end-March level and $38.608 billion higher than a year earlier, according to RBI data.
Notably, this new high beats the previous record of $728.494 billion set in the week ending February 27 before geopolitical tensions in the Middle East led to weeks of declines as the rupee came under pressure and RBI intervened with dollar sales to stabilize it.