Mumbai, June 13 (IANS) India’s foreign exchange reserves surged by $5.17 billion to $696.66 billion for the week ended June 6, data released by the RBI on Friday showed.

The sharp rise during the week has brought the country’s forex kitty close to the historic high of $704.885 that was scaled at the end of September 2024. A strengthening of the country’s foreign exchange kitty also helps bolster the rupee vis-a-vis the US dollar.

For the week ending on June 6, foreign currency assets, a major component of the reserves, increased by $3.47 billion to $587.69 billion. 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.

The gold component of the forex reserves increased by $1.6 million to $85.89 billion during the week. Central banks worldwide are increasingly accumulating gold as a safe-haven asset in their foreign exchange reserves amid uncertainty created by geopolitical tensions. The gold reserves currently amount to $83.582 billion. The share of gold maintained by the Reserve Bank of India (RBI) in its foreign exchange reserves has almost doubled since 2021.

The special drawing rights in the forex kitty were up $102 million to $18.67 billion, the central bank said. India’s reserve position with the IMF was also up $14 million at $4.4 billion in the reporting week, according to the RBI figures.

India’s foreign exchange reserves stood at $691.5 billion in the preceding week that ended on May 30 and are sufficient to fund more than 11 months of goods imports and about 96 per cent of external debt outstanding, RBI Governor Sanjay Malhotra said last week after the monetary policy review.

The RBI Governor said: “Overall, India’s external sector remains resilient as key external sector vulnerability indicators continue to improve. We remain confident of meeting our external financing requirements.”

An increase in the foreign exchange reserves reflects strong fundamentals of the economy and gives the RBI more headroom to stabilise the rupee when it turns volatile.

A strong forex kitty enables the RBI to intervene in the spot and forward currency markets by releasing more dollars to prevent the rupee from going into a free fall.

–IANS

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