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India’s foreign exchange reserves rebound sharply after weeks of pressure, rising by $6.295 billion to $696.988 billion in the week ended May 8.
India’s Latest Forex Reserves.
India’s foreign exchange reserves rebounded sharply after weeks of pressure, rising by $6.295 billion to $696.988 billion in the week ended May 8, according to the latest data released by the Reserve Bank of India (RBI).
The forex kitty had declined by $7.794 billion in the previous reporting week and stood at $690.693 billion.
India’s reserves had earlier touched an all-time high of $728.494 billion in the week ended February 27. However, reserves came under pressure after the onset of the West Asia crisis, which triggered volatility in global markets and weighed on the rupee. The RBI had intervened in the foreign exchange market by selling dollars to curb excessive currency fluctuations.
According to the RBI data, foreign currency assets (FCAs), which form the largest component of forex reserves, increased by $562 million to $552.387 billion during the reporting week. Foreign currency assets, expressed in dollar terms, include the impact of appreciation or depreciation in non-US currencies such as the euro, pound sterling and yen held in the reserves.
Gold reserves registered a sharp jump of $5.637 billion to $120.853 billion during the week under review. The Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) also rose by $84 million to $18.873 billion. India’s reserve position with the IMF increased by $12 million to $4.875 billion, the RBI data showed.
The rise in reserves comes amid the government’s efforts to reduce pressure on the country’s external account following the spike in crude oil prices and geopolitical tensions in West Asia.
On Wednesday, the government increased import duty on gold and silver to 15 per cent from 6 per cent. Import duty on platinum was also raised from 6.4 per cent to 15.4 per cent.
The revised duty structure came into effect from May 13. Consequential changes have also been made in customs duty on products such as gold and silver dore, coins and findings.
The move is aimed at curbing non-essential imports and containing pressure on forex reserves amid rising global uncertainties.
Earlier this week, Prime Minister Narendra Modi also urged citizens to avoid purchasing gold for a year in order to help conserve the country’s foreign exchange reserves.
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