India's forex reserves jump by $4.758 billion to hit two-month high of $640.479 billion: RBI

India's foreign exchange (forex) reserves jumped by $4.758 billion to hit a two-month high of $640.479 billion in the week ended February 21. Reserve Bank of India (RBI) data showed that forex reserves rose by $4.76 billion in the week under review. However, they had fallen by nearly $2.54 billion to $635.721 billion in the previous reporting week, the most in a month.

Forex reserves have been declining for several weeks due to revaluation and RBI forex market interventions to help reduce rupee volatility. At the end of September 2024, India's forex kitty hit an all-time high of $704.885 billion.

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India's forex reserves: Key metrics

The RBI data showed that foreign currency assets (FCA), a major component of reserves, rose by $4.251 billion to $543.843 billion for the week ending February 21. Expressed in dollar terms, changes in FCA are caused by the RBI's intervention in the forex market and the appreciation or depreciation of foreign assets or non-US units like the euro, pound and yen held in forex reserves.

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Gold reserves increased by $426 million to $74.576 billion during the reporting week. The Special Drawing Rights (SDRs) were up by $73 million to $17.971 billion. India's reserve position with the International Monetary Fund (IMF) was up by $7 million at $4.09 billion in the reporting week. Forex reserves include India's Reserve Tranche position in the IMF.

The rupee, like its Asian peers, has been volatile amid global uncertainty surrounding US trade tariffs but periodic intervention by the central bank has helped cap large-scale losses in the domestic unit. The reserves data pertain to the week the rupee advanced 0.1 per cent, broadly benefiting from a weaker dollar. The domestic unit ended at 87.4950 per dollar on Friday. It fell one per cent in February and slipped to an all-time low of 87.95 during the month.

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