India's foreign exchange reserves witnessed an increase of USD 938 million, reaching USD 682.321 billion for the week ending May 28, according to data released by the Reserve Bank of India (RBI) on Friday. This rise comes after a decline of USD 7.511 billion in the previous week, which had brought the reserves down to USD 681.384 billion.
Recent Trends in Forex Reserves
The country's forex kitty had soared to an all-time high of USD 728.494 billion during the week ended February 27 this year. However, the onset of the Middle East conflict led to several weeks of decline as the Indian rupee came under pressure, prompting the RBI to intervene in the forex market through dollar sales.
Prime Minister Narendra Modi has made multiple public appeals starting May 11, urging citizens to conserve foreign exchange by reducing foreign travel, limiting fuel consumption, and refraining from purchasing gold for a year. These measures aim to stabilize the reserves and support the rupee.
Components of Reserves
For the week ended May 29, foreign currency assets (FCAs), a major component of the reserves, increased by USD 3.116 billion to USD 546.148 billion, as per the central bank's data. Expressed in dollar terms, the FCAs include the effects of appreciation or depreciation of non-US currencies such as the euro, pound, and yen held in the reserves.
In contrast, the value of gold reserves declined by USD 2.186 billion to USD 112.6 billion during the same week, the RBI stated. The special drawing rights (SDRs) remained unchanged at USD 18.747 billion.
IMF Position
India's reserve position with the International Monetary Fund (IMF) increased by USD 8 million to USD 4.826 billion at the end of the reporting week, according to the apex bank's data.
The overall increase in reserves provides some relief after recent weeks of decline, reflecting the RBI's efforts to manage currency volatility and maintain adequate buffers against external shocks.
