Blitz India Business
NEW DELHI: India’s foreign exchange reserves surged by $12.4 billion to a record high of $729.3 billion during the week ended August 21. India’s previous forex reserve high of $728.494 billion was recorded in the week ended February 27, before the onset of the Middle East conflict.
According to the Reserve Bank of India data, foreign currency assets, the largest component of the reserves, increased by $9.4 billion to $591.3 billion during the week. Gold reserves added $2.8 billion to $114.2 billion. Special Drawing Rights rose by $112 million to $18.8 billion. Country’s reserve positions with the International Monetary Fund added $26 million to around $4.9 billion.
In June, India unveiled a raft of measures to boost dollar inflows, including discounted hedging facilities for overseas borrowings by state-run firms and banks, and a free-of-cost hedging facility for banks to raise overseas FX deposits. The RBI received nearly $73 billion under these schemes between June 5 and August 21, including about $65 billion from non-resident Indian deposits.
The scale of inflows prompted the central bank to bring forward the closure of its deposit hedging facility by a month to August end.
“The rise in FX reserves is a combination of RBI buying dollars during that week and the rest is revaluation gain. The dollar purchase is led by FCNR-B swap window with banks pushing for deposits before the window closes,” said Gaura Sen Gupta, chief economist at IDFC First Bank.
