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Informist, Friday, Feb. 7, 2025

MUMBAI – India's foreign exchange reserves rose to $630.6 billion as of Jan. 31 from $629.6 billion a week prior, providing an import cover of over 10 months, Reserve Bank of India Governor Sanjay Malhotra said in the Monetary Policy Statement on Friday. The reserves rose around $1 billion in the week ended Jan. 31.

This was the second consecutive week the foreign exchange reserves rose, after weeks of continuous decline. During the week ended Jan. 31, the rupee fell 0.5% against the greenback. The foreign exchange reserves rose in the reporting week despite a fall in the rupee as market participants said the RBI did not intervene in the currency market aggressively to prevent the rupee from falling sharply. 

"Our stated objective is to maintain orderliness and stability, without compromising market efficiency," Malhotra said. "Accordingly, our interventions in the forex (foreign exchange) market focus on smoothening excessive and disruptive volatility rather than targeting any specific exchange rate level or band. The exchange rate of the Indian rupee is determined by market forces."

In the present week, the RBI's foreign exchange reserves are likely to rise, owing to the central bank's $5 billion dollar/rupee buy/sell swap. The RBI had conducted the swap on Dec. 31, which was settled on Tuesday. 

During the speech, Malhotra said India's external sector remains resilient due to robust key indicators, including the nation's external debt-to-GDP ratio and net international investment position. Further, the RBI governor said the current account deficit in 2024 is expected to remain "well within the sustainable level". In Jul-Sept, the current account deficit moderated to 1.2% of the GDP from 1.3% in the corresponding quarter a year ago.  End

US$1 = INR 87.43

Reported by Sourabh Kumar

Edited by Tanima Banerjee

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