Gains moderate to $835 mn, but forex reserves steady on record high path - The Indian Express
By: ENS Economic Bureau | New Delhi | July 25, 2021 1:39:38 am
In the previous week ended July 9, the reserves had surged by $1.883 billion to $611.895 billion.
Maintaining a winning streak, the forex reserves swelled by $835 million to reach another record high of $612.73 billion in the week ended July 16, 2021, data from the Reserve Bank of India (RBI) showed. In the previous week ended July 9, the reserves had surged by $1.883 billion to $611.895 billion.
During the reporting week ended July 16, 2021, the increase in foreign exchange — or forex — reserves was on account of the rise in foreign currency assets (FCA), the weekly RBI data released on Friday showed. The FCA — a major component of the overall reserves — rose by $463 million to $568.748 billion in the reporting week.
Expressed in dollar terms, foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Gold reserves were up by $377 million to $37.333 billion in the reporting week, the data showed.
The special drawing rights (SDRs) with the International Monetary Fund (IMF) were up by $1 million at $1.548 billion.
The country’s reserve position with the IMF declined by $7 million to $5.1 billion in the reporting week, the data showed.
The rising forex reserves could bring some comfort to the government as well as the RBI in managing the external and internal financial issues at a time when the economy is facing Covid stress once again and it could have an impact on the GDP growth rate for the ongoing fiscal as states are announcing lockdowns. It is a big cushion in the event of any crisis on the economic front and enough to cover India’s import bill for a year.
An increase in the forex kitty could also help strengthen the rupee against the US dollar
Higher reserves could bring confidence to markets that a country can meet its external obligations, demonstrate the backing of domestic currency by external assets, assist the government in meeting its foreign exchange needs as well as external debt obligations.
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