India’s foreign exchange (forex) reserves have seen the most significant weekly increase in the past four months. The Reserve Bank of India’s (RBI) latest report shows reserves have increased by a staggering $12.74 billion, bringing the total to $609.02 billion. This follows a previous increase of $1.23 billion just the week before.
In the same period, gold reserves rose by $1.14 billion to $45.20 billion. Special Drawing Rights (SDRs), an international money reserve, also increased by $250 million to total $18.50 billion.
India’s forex reserves reached a record high of $645 billion in October 2021. Post that, they’ve been slightly decreasing as the RBI has been using these reserves to support the rupee, which faced pressures mainly from global events.
High forex reserves are a good sign. They show we have enough funds to handle uncertain times or pay for necessary imports.
The RBI keeps a close eye on the forex markets and steps in when needed. They sell dollars occasionally to stop the rupee from falling too fast. The aim is not to maintain a specific rupee value but to keep the market orderly and prevent sudden changes in the rupee’s value.
Put simply, the fact that our forex reserves have increased indicates that we are well prepared to navigate through uncertainties.