India’s foreign reserves up by US$ 10.42 billion

India’s foreign exchange reserves rose by US$ 10.42 billion to reach US$ 572 billion, a five-month high in the week ended January 13, 2023, according to a report from the Reserve Bank of India (RBI). 

According to media reports, experts said that the growth in India’s foreign reserves was due to a positive valuation impact led by a weaker US dollar and the possible purchases of the American currency by the RBI. The reports also said that the rise in the RBI’s reserves has been the sharpest since the week ended December 2, 2022.

As per the data, the RBI’s foreign currency assets rose by US$ 9.1 billion to reach US$ 505.52 billion in the week ended January 13, this year. Media reports said that the rupee gained by 1.7% against the US dollar in the previous week, strengthening past the US$82 mark.

The Indian banking system is witnessing improved liquidity, as the RBI might have made some US dollar purchases. They further added that India’s overall balance of payments has also improved, and the fourth quarter is usually favourable for FDI inflows, either through the export of software services or for debt-equity inflows.

According to experts, the RBI has bought the dollar to support the Indian Rupee from sharp appreciation, which has absorbed the Start-up funding inflows. Additionally, the appreciation in gold and non-dollar assets has also reflected the gains in the Central bank’s forex reserves.  

In November 2022, the central bank net purchased US dollars for the first time since May 2022. Additionally, the RBI was a net seller of US dollars in the currency market from June to October of 2022, last year. Media reports said that India’s foreign exchange reserves grew by US$ 28.9 billion since September 2022, and reached US$ 561.6 billion on January 6, covering above nine months of imports projected for FY23.

Source: Business Standard