Foreign exchange reserves rose by $835 million to hit another record high of $612.73 billion in the week ended July 16, 2021, data from the Reserve Bank of India (RBI) shows. In the previous week ended July 9, reserves had risen by $1.883 billion to $611.895 billion.
Weekly RBI data released on Friday showed that during the reporting week ended July 16, 2021, the increase in foreign exchange – or forex – reserves was due to an increase in foreign currency assets (FCAs). FCAs – a major component of overall reserves – rose $463 million to $568.748 billion in the reporting week.
Expressed in dollar terms, foreign currency assets include the effect of appreciation or depreciation of non-US units such as the euro, pound and yen held in foreign exchange reserves.
The data showed that gold reserves rose by $377 million to $37.333 billion in the reporting week.
The Special Drawing Rights (SDR) with the International Monetary Fund (IMF) increased by $1 million to $1.548 billion.
The country’s reserve position with the IMF declined by $7 million to $5.1 billion in the week under review.
Rising forex reserves may give some comfort to the government as well as the RBI in managing external and internal financial issues when the economy is once again facing covid stress and this may have an impact on the GDP growth rate. Fiscal because states are announcing lockdown. This is a big cushion in case of any crisis on the economic front and is enough to cover India’s import bill for a year.
A rise in the forex kitty may help strengthen the rupee against the US dollar
Higher reserves can instill confidence in the markets that a country can meet its external obligations, demonstrate the support of the domestic currency by external assets, help the government meet its foreign exchange needs as well as external debt obligations. make capable. can assist in.
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