India's foreign exchange reserves (FOREX) jumped by USD 7.196 billion to USD 595.976 billion in the week ended on May 5, the Reserve Bank of India (RBI) said on Friday May 12
The overall reserves had dropped by USD 4.532 billion to USD 588.78 billion in the previous reporting week. In October 2021, the country's forex reserve had reached an alltime high of USD 645 billion.
The Forex reserves have been declining as the Reserve Bank of India deployed the kitty to defend the rupee amid pressures caused majorly by global developments. During the week ended on May 5, the foreign currency assets, a major component of the reserves, increased by nearly USD 6.536 billion to USD 526.021 billion, according to the latest Weekly Statistical Supplement released by the Reserve Bank of India.
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 increased by USD 659 million to USD 46.315 billion, the RBI said.
India Forex reserves refer to the foreign currency assets held by the Reserve Bank of India (RBI), which is the central bank of India. These reserves include foreign currencies, gold, Special Drawing Rights (SDRs) allocated by the International Monetary Fund (IMF), and other reserve assets.
The purpose of maintaining Forex reserves is to ensure the stability and security of a country's financial system, particularly during times of economic turmoil or external shocks. Forex reserves can be used to manage currency fluctuations, to pay for imports, and to support the country's external debt payments. The increase in Forex reserves is attributed to various factors, such as higher inflows of foreign investment, a surplus in the current account balance, and a rise in remittances from Indians living abroad.
