RBI reserves
FX reserves hit record high of $666.85 bln, up most in a week in 4 months
This story was originally published at 19:41 IST on 19 July 2024
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NEW DELHI – India's foreign exchange reserves hit an all-time high of $666.85 bln as of Jul 12, according to data released by the central bank today. The reserves rose by $9.7 bln during the week, posting their largest weekly gain in over four months.
Market participants said the jump in foreign exchange reserves was primarily due to the Reserve Bank of India's active intervention through dollar purchase in the domestic spot market. The central bank has been actively intervening in the spot market, both through dollar purchases and dollar sales, to prevent excessive volatility in the exchange rate, according to dealers.
"RBI seems to have been buying all the inflows which came after 28th. Part may be valuation effect too. Gold reserves too expanded by $1.23 bln," Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP, said.
Dealers said the RBI may have absorbed the foreign fund inflows on account of Indian government bonds' inclusion in JP Morgan's Government Bond Index – Emerging Markets suite, which took place on Jun 28. Since the inclusion, foreign portfolio investors have bought $1.4 bln worth of gilts under the fully accessible route, which are index-eligible.
Last month, RBI Governor Shaktikanta Das said that the central bank would continue to build up the reserves 'opportunistically'. "I have said it earlier also, it is a matter of stated policy, we don't shy away from that," he said.
Market participants said the jump in foreign exchange reserves was also due to revaluation gains after a fall in US Treasury yields and the dollar index and a rise in gold prices. The benchmark 10-year US Treasury yields slipped nearly 9 basis points during Jul 5-12, which led to valuation gains for the central bank's holding in US government debt. The dollar index also fell 0.8% during the same period, which boosted the valuation of the RBI's investment in other currency securities.
Foreign currency assets also rose by $8.36 bln to $585.47 bln as of Jul 12. Calculated in dollar terms, the foreign currency assets include the impact of appreciation or depreciation of non-US units like the euro, pound and yen held in foreign exchange reserves. Gold reserves expanded by $1.23 bln to $58.66 bln in the reporting week. End
US$1 = 83.66 rupees
Reported by Pratiksha
Edited by Tanima Banerjee
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