New Delhi: With the concessional swap window of the Reserve Bank of India (RBI) resulting in strong dollar inflows, particularly under the Foreign Currency Non-Resident (Bank) – or FCNR (B) – deposits scheme, India’s foreign exchange reserves surged to a record USD 785.7 billion in the week ending September 4.
These measures also helped India post its largest-ever weekly increase, with forex reserves rising by USD 44.9 billion.
This surge propelled India above Russia to become the world’s fourth-largest holder of foreign exchange reserves, behind China, Japan, and Switzerland, estimates reveal, as reported by The Tribune.
In the week ending August 28, total reserves had reached a previous high of roughly USD 740 billion.
The rupee is still under pressure though; on Friday, it dropped for the fourth session in a row to end at 95.56 to the dollar from 94.45 due to pressure from rising crude oil prices and US Treasury yields.
It reduced losses following RBI intervention, dealers reported. Since the start of the conflict in West Asia, the rupee has lost 4.79 per cent of its value, and this month it has lost 0.4 per cent.
Latest RBI data released on Friday reveal that foreign currency assets, which make up the majority of the FX reserves, increased by USD 47.5 billion to USD 648.17 billion during the week ending September 4.
The impact of fluctuations in the value of non-US currencies held in the reserves, such as the euro, pound, and yen, is also reflected in the figure, which is expressed in dollars.
In contrast, gold prices dropped 0.56 per cent to USD 4,429 an ounce during the week, causing gold reserves to drop by USD 2.59 billion to USD 113.81 billion.
With more foreign currency inflows expected until the second week of September, market participants anticipate that foreign currency assets will increase even more, possibly surpassing USD 655 billion.
By August 31, foreign currency inflows totaling USD 136.4 billion had been mobilized by the RBI’s exceptional swap operations. While external commercial borrowings and foreign currency bonds are still eligible under the facility until December 31, the window for FCNR (B) deposits ended on August 31. Up until September 11, banks may use the swap facility for deposits that have already been committed.
