India’s forex reserves rise by over $2 bn after falling four consecutive weeks


India’s foreign exchange reserves rose by $2.315 billion during the week ending July 29, after falling for the last four consecutive weeks, on the back of positive inflows by foreign investors in the Indian equity market, central bank data shows.

The country’s foreign exchange stand at $573.875 billion during the week ending July 29, according to the Reserve Bank of India’s (RBI) weekly supplementary statistical data.

RBI Governor Shaktikanta Das said, “India’s foreign exchange reserves, supplemented by net forward assets, provide insurance against global spillovers. Our umbrella remains strong. The Reserve Bank has also used its foreign exchange reserves accumulated over the years to curb volatility in the exchange rate.”

During the current financial year (up to August 4), the US dollar index (DXY) has appreciated by 8 per cent against a basket of major currencies. However, according to RBI sources, the Indian Rupee has moved in a relatively orderly fashion depreciating by 4.7 per cent against the US dollar during the same period, faring much better than several reserve currencies as well as many of its EME and Asian peers.

The depreciation of the Indian rupee is more on account of the appreciation of US dollar rather than weakness in macroeconomic fundamentals of the Indian economy, Das said.

“Market interventions by the RBI have helped in containing volatility and ensuring orderly movement of the rupee. We remain watchful and focused on maintaining stability of the Indian rupee,” Das added.

In July, foreign investors turned net buyers in Indian equities after nearly 10 months, with an investment of around ₹4,980 crore (approximately $626 million) in Indian equity markets. This comes heavy sell-off by these entities of around ₹50,203 crore (approximately $6.31 billion).

The other central banks of Asia also used their foreign exchange reserves to defend their currency.

Despite the resultant drawdown, India’s foreign exchange reserves remain the fourth largest globally.