India’s forex reserves halts 2-week losing streak, rises by $4 bn to $598 bn

India’s foreign exchange or forex reserves jumped by $4.039 billion to $598.897 billion for the week ended September 1, data from the Reserve Bank of India (RBI) showed on Friday, September 8. With this, forex reserves halted a two-week losing streak and an increase of $4.04 billion from the previous week, recorded the biggest gain in nearly two months.

In the previous reporting week, the overall reserves had dropped by $30 million to $594.858 billion. Notably in October 2021, the country’s forex kitty had reached an all-time high of $645 billion.

The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global developments since last year. For the week ended September 1, the foreign currency assets, a major component of the reserves, increased by $3.442 billion to $530.691 billion, according to the Weekly Statistical Supplement released by the RBI.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.

Gold reserves were up by $584 million to $44.939 billion, according to the central bank’s data. The Special Drawing Rights (SDRs) were up by $1 million to $18.195 billion, as per RBI data.

The country’s reserve position with the IMF was also up by $12 million to $5.073 billion in the reporting week, according to the data.

The central bank intervenes in the spot and forwards markets to prevent runaway moves in the rupee. The changes in foreign currency assets, expressed in dollar terms, include the effects of appreciation or depreciation of other currencies held in the RBI’s reserves.