India's forex reserves rise by $10 billion on inflows, revaluation

India’s foreign exchange reserves increased by $10.8 billion in the previous week ended April 4, latest data by the Reserve Bank of India (RBI) showed. The total reserves rose on the back of an increase in foreign currency assets, which rose by $9 billion during the week.

 

Foreign currency assets increased due to inflows and revaluation as the dollar weakened over the week, said market participants. 

 

“The forex reserves have gone up because we have seen FPIs coming into the debt segment, and there could be a valuation effect also taking place because we have seen earlier when the dollar has been strengthening, the reserve value comes down, but we have seen that when the dollar has been weakening, reserves go up,” said Madan Sabnavis, chief economist at Bank of Baroda.

 

The total reserves stood at $676 billion in the week ended April 4. In the current calendar year so far, the reserves have increased by $36 billion. In the week ended September 27, 2024, the reserves had hit a record high of $705 billion.

 

“For the most part, it is revaluation. We expect that RBI will now buy dollars in the spot too to replenish their reserve,” said a foreign exchange dealer at a state-owned bank.

 

During the previous week, the rupee had erased all its losses for the current calendar year to trade above the 85-per-dollar mark. However, as the dollar strengthened, it gave up the gains in the current week.

 

Gold reserves increased by $1.5 billion during the week. Additionally, the special drawing rights (SDRs) were up $186 million to $18.3 billion. India’s reserve position with the International Monetary Fund (IMF) was also up by $46 million to $4.4 billion in the reporting week.