Forex Reserves Surge by Over $10 Billion, Reaching Over a Two-Year High
The Reserve Bank of India reports a Forex reserves surge, hitting a two-year-plus high of $636 billion as of March 8, with a record weekly increase of $10.47 billion since July 14, 2023.
India's foreign exchange (forex) reserves have been on the rise, marking their third consecutive week of gains and hitting a significant milestone by reaching a more than two-year high. As of March 8, there was a Forex reserve surge to $636.10 billion, as reported by the country's central bank this Friday. The staggering surge of $10.47 billion in foreign exchange reserves in just one week is the largest jump seen since mid-July 2023.
In the weeks leading up to this record growth, the reserves had already been inching closer to their all-time high of $642.45 billion, set back in September 2021, with a combined rise of $9.5 billion in the two preceding weeks.
The Reserve Bank of India (RBI), which plays a critical role in managing the country's foreign exchange market, has been actively working to stabilise the rupee. During the reported week, the RBI engaged in buying dollars in the spot market. This move was aimed at managing the influx of foreign investments in debt and equity markets, as observed by market traders.
Another factor contributing to the surge in reserves, as indicated by recent forex reserves data, was the notable increase in the value of its gold holdings. The valuation of gold in the reserves jumped to $50.72 billion from $48.42 billion the week before. Gold prices saw a significant rise during the same period, reflecting in India's domestic market, where the price for 10 grams of gold reached a new high of 66,356 rupees on March 8. Being the world's second-largest consumer of gold, these movements in gold prices have a substantial forex reserves impact on the economy, emphasising the intricate connections between commodity valuations, forex reserves, and economic stability.
During the week in review, the Indian rupee showed a slight uptick against the dollar, gaining 0.1%. It ranged between 82.7250 and 82.9275 before closing at 82.8775. Despite this, there was a minor week-on-week decline, the first since mid-February, amidst the country's march towards achieving a record high for forex reserves.
