Anjali Sharma
GG News Bureau
NEW YORK , 14th July. According to RBI data released on Saturday India’s foreign exchange reserves jumped by $5.16 billion to scale a lifetime high of $657.16 billion by week ending July 5.
India’s forex reserves had contracted by $1.71 billion to $652 billion for the week ending on June 28 but have bounced back to resume the rising trend of previous weeks.
An increase in the foreign exchange reserves reflects strong fundamentals of the economy and gives the RBI more headroom to stabilise the rupee when it turns volatile.
A strong forex kitty enables the RBI to intervene in the spot and forward currency markets by releasing more dollars to prevent the rupee from going into a free fall, data said
The declining forex kitty leaves the RBI less space to intervene in the market to prop up the rupee.
RBI Governor Shaktikanta Das had said that India’s external sector remains resilient and overall the central bank remains confident of meeting the country’s external financing requirements comfortably.
Data noted that India’s current account deficit declined to US$ 23.2 billion (0.7 per cent of GDP) during 2023-24 from US$ 67.0 billion (2.0 percent of GDP) during the previous year due to a lower merchandise trade deficit which reflects a robust external balance position, according to RBI data released on June 24 this year.
The RBI data showed that India’s current account balance recorded a surplus of US$ 5.7 billion (0.6 percent of GDP) in the Jan-March quarter of 2023-24 as against a deficit of US$ 8.7 billion (1.0 percent of GDP) in the preceding Oct-Dec quarter of 2023-24 and US$ 1.3 billion (0.2 percent of GDP) the fourth quarter of 2022-23, reflected an improvement in the country’s macroeconomic position.
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