The rupee experienced its best performance of the year during the period covered by the forex data, bolstered by a 50-basis-point rate cut by the United States Federal Reserve and increased inflows into Indian stocks and bond
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India’s foreign exchange reserves climbed for the sixth consecutive week to a record high of $692.3 billion as of September 20, according to data released by the Reserve Bank of India (RBI) on Friday (September 27).
The reserves increased by $2.84 billion during the week, following a total rise of $19.3 billion over the previous five weeks.
Foreign currency assets, the largest component of the reserves, rose to $605.7 billion from $603.6 billion in the previous week.
The rise in foreign exchange reserves is attributed to the RBI’s intervention in the forex market and the movement of foreign assets, which fluctuate with global currency appreciation and depreciation. The central bank manages the rupee’s volatility by buying and selling foreign currency as needed.
Gold and SDRs
India’s foreign exchange reserves also include gold, SDRs, and the country’s reserve tranche position in the IMF.
Gold reserves increased, climbing to $63.6 billion from $62.9 billion. Special Drawing Rights (SDRs) stood at $18.5 billion, up from $18.4 billion, while the reserve tranche position with the International Monetary Fund (IMF) fell slightly to $4.46 billion from $4.52 billion.
SDRs are an international reserve asset created by the International Monetary Fund (IMF) to supplement the official reserves of its member countries. These are not a currency, but they represent a claim to foreign currencies that IMF members can exchange in times of need.
The value of SDRs is determined by a basket of major currencies, which currently includes the US dollar, euro, Chinese yuan, Japanese yen, and British pound.
Rupee value
The rupee experienced its best performance of the year during the period covered by the forex data, bolstered by a 50-basis-point rate cut by the United States Federal Reserve and increased inflows into Indian stocks and bonds. It rose to a more-than-two-month high of 83.4850 last week, gaining nearly 0.4 per cent week-on-week.
However, the Indian rupee settled slightly lower at 83.70 against the U.S. dollar on Friday, declining by 0.1 per cent over the week.
With inputs from Reuters