India’s Foreign Exchange Reserves Reach Record High
India’s foreign exchange reserves reached a record high of $692.3 billion as of September 20, marking the sixth consecutive week of growth. This increase, amounting to $2.84 billion, follows a total rise of $19.3 billion over the previous five weeks. The bolstered reserves can be attributed to various factors, including the Reserve Bank of India’s intervention in the forex market.
Composition of Reserves
The foreign exchange reserves consist of various components, with foreign currency assets being the largest. This component rose to $605.7 billion from $603.6 billion in the previous week. Additionally, the reserves include gold, Special Drawing Rights (SDRs), and the country’s reserve tranche position in the IMF.
Gold reserves saw an increase, reaching $63.6 billion, while SDRs stood at $18.5 billion. The reserve tranche position with the IMF slightly decreased to $4.46 billion.
The Role of SDRs
SDRs are an international reserve asset designed by the IMF to supplement member countries’ official reserves. These assets represent a claim to foreign currencies that can be exchanged in times of need. The value of SDRs is determined by a basket of major currencies, including the US dollar, euro, Chinese yuan, Japanese yen, and British pound.
Rupee Performance
The Indian rupee demonstrated strong performance during the period covered by the forex data, reaching a more-than-two-month high. Factors contributing to this growth include a rate cut by the US Federal Reserve and increased inflows into Indian stocks and bonds. Despite a slight decline to 83.70 against the US dollar, the rupee’s overall performance remained positive.
Source : www.firstpost.com