India's Forex Reserves Rise $3.8 Billion, Nearing $701 Billion Mark

This marks a continued recovery in the country's forex kitty, which had already risen by $9.063 billion to $697.121 billion in the previous week ended April 3.

India's reserves had touched an all-time high of $728.494 billion in late February this year.

However, they saw a decline in the following weeks as geopolitical tensions in the Middle East put pressure on the rupee, prompting the central bank to intervene in the currency market through dollar sales.

The latest rise in reserves was largely driven by an increase in foreign currency assets (FCA), which form the biggest component of the overall reserves. These assets went up by $3.127 billion to $555.983 billion during the reporting week.

Foreign currency assets include the impact of movements in non-US currencies such as the euro, pound and yen, which are part of the reserves and can fluctuate with exchange rate changes.

Apart from this, the value of gold reserves also saw an uptick, rising by $601 million to $121.343 billion, as per the central bank's data.

The RBI data further showed that Special Drawing Rights (SDRs) increased by $56 million to $18.763 billion during the week.

Meanwhile, India's reserve position with the International Monetary Fund rose by $41 million to $4.857 billion.

The steady rise in forex reserves is seen as a positive sign for the economy, as it provides a cushion against external shocks and helps maintain stability in the currency market.

Foreign exchange reserves play a crucial role in maintaining economic stability, helping the central bank manage currency fluctuations and ensuring smooth external trade.

A robust reserve position allows the RBI to intervene in the currency market to support the rupee during periods of volatility, while also reflecting sustained inflows of foreign currency into the economy.

- IANS