NEW DELHI — India’s foreign exchange reserves rose by $3.293 billion to reach $696.610 billion for the week ended December 26. This follows an upward trend established the previous week, which saw a reserves increase of $4.368 billion.
Foreign currency assets, the largest component of the reserves, increased by $184 million to $559.612 billion. Gold reserves registered a sharp rise of $2.956 billion, reaching a total of $113.320 billion, an increase primarily attributed to a surge in international gold prices. Special Drawing Rights also grew by $60 million to $18.803 billion, while the reserve position with the International Monetary Fund rose by $93 million to $4.875 billion.
The latest increase was supported by a $5 billion USD/INR buy-sell swap auction conducted on December 16 to inject liquidity into the banking system. Under the swap arrangement, banks sold US dollars to the central bank in exchange for rupees and agreed to buy back the same amount of dollars at the end of the swap period. The transaction was settled on December 18, contributing to the overall reserve position.
The steady rise in foreign exchange reserves comes amid strong capital inflows and a notable increase in foreign direct investment commitments during the current financial year. These reserves serve as a key indicator of economic health and play a crucial role in maintaining exchange rate stability. Market interventions are conducted to reduce excessive volatility in the rupee’s movement and are not linked to any fixed exchange rate target. (Source: IANS)
