India's forex kitty jumps $2.9 billion to new high of $645.6 billion

Das says confident of meeting external financing requirements

India’s foreign exchange reserves rose to a new high for the third straight week, reaching $645.58 billion in the week ended March 29, latest data by the Reserve Bank of India (RBI) showed.

The total reserves rose by $2.95 billion in the previous week.

RBI Governor Shaktikanta Das in his monetary policy statement said: “India’s foreign exchange reserves reached an all-time high of $645.6 billion as on March 29. Latest data on various external vulnerability indicators suggest improved resilience of India’s external sector. We remain confident of meeting our external financing requirements comfortably.”

The reserves rose on the back of a rise in foreign currency assets, which increased by $2.3 billion in the week. The rupee appreciated marginally by 2 paisa against the US dollar in the previous week.

The local currency appreciated by 15 paisa on Friday to settle at 83.29 against the dollar as a weak dollar throughout the day gave notable support for the rupee. The RBI governor’s positive remarks regarding the robustness of the Indian economy further aided rupee. These comments contributed significantly to the rupee’s resilience amid ongoing geopolitical tensions, they said.

“With elections looming, rupee volatility is expected to persist, especially as the dollar's trend remains uncertain. The expected range for the rupee is between 83.15-83.55,” said Jateen Trivedi, V-P Research Analyst, LKP Securities.

Government bond yields rose by 3 basis points after the MPC meeting outcome. The yield on the benchmark 10-year government bond yield settled at 7.12 per cent on Friday, against 7.09 per cent on Thursday.

“A segment of the market was expecting some dovish comments,” said a dealer at a state-owned bank. “The policy was not dovish at all, the comments were hawkish which led to the rise in yields,” he added.