New Delhi: India’s foreign exchange reserves have once again reached a fresh lifetime high. According to official data from the Reserve Bank of India (RBI) released on Friday, the forex reserves rose by USD 5.158 billion in the week ending July 5, bringing the total to USD 657.155 billion. This surpasses the previous high of USD 655.817 billion recorded last month.
During the same week, gold reserves increased by USD 904 million, reaching USD 57.432 billion. With this significant rise, India’s foreign exchange reserves are now sufficient to cover over 11 months of projected imports, as noted in a recent RBI report.
In the calendar year 2023, the RBI bolstered its forex reserves by approximately USD 58 billion. This is a notable recovery from 2022 when the reserves saw a cumulative decline of USD 71 billion.
Foreign exchange reserves, also known as forex reserves, are assets held by a nation’s central bank or monetary authority. These reserves are generally maintained in reserve currencies, predominantly the US Dollar, and to a lesser extent, the Euro, Japanese Yen, and Pound Sterling.
The country’s forex reserves had previously reached an all-time high in October 2021. The subsequent decline was largely due to increased costs of imported goods in 2022. Additionally, the relative fall in reserves could be linked to the RBI’s market interventions to mitigate the uneven depreciation of the rupee against a strengthening US dollar.
The RBI intervenes in the forex market through liquidity management, including the sale of dollars, to prevent a sharp depreciation of the rupee. The central bank closely monitors the foreign exchange markets and steps in to maintain orderly conditions, aiming to contain excessive volatility in the exchange rate without adhering to any pre-determined target level or band.