NEW DELHI: India’s foreign exchange reserves have surged to an unprecedented high of $689.24 billion as of September 6, marking the fourth consecutive week of increases, according to data released by the central bank on Friday.
This recent boost of $5.3 billion in reserves follows a substantial rise of $13.9 billion over the previous three weeks.
The Reserve Bank of India (RBI) plays a crucial role in stabilizing the foreign exchange market through strategic interventions.
By engaging in both buying and selling foreign currency via state-run banks in the spot market, the RBI helps to mitigate excessive volatility in the Indian rupee. These actions have been instrumental in preventing a sharper decline in the currency, which has been trading around 84 rupees per US dollar in recent times, according to traders.
During the week ending September 6, the rupee experienced a slight decline of 0.1% against the dollar, but remained within a narrow trading range.
On Friday, the rupee closed at 83.8875, reflecting a modest week-on-week improvement of nearly 0.1%. This marked its strongest weekly performance since the week ending June 25.
The fluctuations in foreign exchange reserves are influenced by several factors, including the RBI’s market interventions and the variations in the value of foreign assets held within the reserves.
Additionally, the reserves encompass India’s reserve tranche position with the International Monetary Fund (IMF), which also contributes to the overall reserve figures.
This record high in reserves underscores India’s robust foreign exchange management and the effectiveness of the RBI’s strategies in maintaining currency stability amid global market fluctuations.
The ongoing accumulation of reserves reflects the country’s strengthening financial position and its ability to withstand external economic pressures.
