India's foreign exchange reserve hits new high of $655.81 billion

India’s foreign exchange reserves hit a new record high for the second consecutive week, reaching $655.81 billion for the week ended June 7, latest data by the Reserve Bank of India showed. The total reserves rose by $4.30 billion on the back of a rise in foreign currency assets, which increased by $3.77 billion during the week.

The total reserves stood at $651 billion in the week ended May 31. In the current calendar year, India’s foreign exchange reserves have increased by $14.59 billion so far. In the previous calendar year, the total reserves had risen by $30.65 billion.

Foreign exchange market participants said that the RBI has been absorbing the foreign inflows, which led to the rise in foreign currency assets.

“It is due to the absorption of foreign inflows by the RBI that we are seeing in the debt for the past two weeks,” said the treasury head at a private bank. The domestic debt market witnessed a net inflow of Rs 5,960 crore in the previous week. The rupee appreciated by 0.1 per cent during the same period.

Gold reserves rose by $481 million, while Special Drawing Rights (SDRs) rose by $43 million during the week.

“India's significant foreign exchange reserves would give the RBI greater flexibility in managing the country's currency and monetary policy in light of geopolitical conditions and global macroeconomic headwinds,” said Sanjeev Agrawal, President, PHD Chamber of Commerce and Industry.