Mumbai- India’s foreign exchange reserves rose by $10.8 billion to $676.3 billion in the week ended April 4, according to data released by the Reserve Bank of India (RBI) on Friday.
This marks a rise in the country’s foreign exchange reserves for the fifth consecutive week.
Foreign currency assets, the largest component of the reserves, rose by $9 billion to $574.08 billion. Gold reserves also rose by $1.5 billion to $79.36 billion. Meanwhile, RBI’s weekly statistical supplement showed that special drawing rights (SDR) rose by $186 million to $18.36 billion.
In the previous week ended March 28, India’s reserves had risen by $6.6 billion to a five-month high of $665.4 billion. The recent rise follows a decline caused by currency revaluation and RBI’s intervention in foreign exchange markets aimed at curbing rupee volatility.
India’s foreign exchange reserves had earlier touched a record high of $704.89 billion in September 2024.
Strong foreign exchange reserve position makes the Indian rupee stronger against the US dollar and indicates strong macroeconomic fundamentals. It also provides the RBI with greater flexibility to intervene in both spot and forward currency markets to stabilize the rupee during times of volatility.
Conversely, shrinking foreign exchange reserves limits the central bank’s ability to support the rupee during times of pressure.
Further, India’s merchandise trade deficit narrowed to a three-year low of $14.05 billion in February, down from $22.99 billion in January, according to data from the Ministry of Commerce and Industry. This improvement was driven by stable exports and a decline in imports, indicating resilience in the external sector despite global economic uncertainties resulting from geopolitical tensions.