Mumbai: India’s foreign exchange reserves surged to a record $729.33 billion in the week ended August 21, according to data released by the Reserve Bank of India (RBI) on Friday. The reserves rose by $12.42 billion from $716.91 billion a week earlier, marking the eighth consecutive week of gains.
India’s foreign exchange reserves have increased by around $63 billion over the past eight weeks, surpassing the previous record reached in February. The latest rise has been driven largely by sustained dollar inflows following measures introduced by the government and RBI to strengthen the country’s balance of payments.
In June, authorities introduced measures to encourage overseas dollar inflows, including discounted hedging facilities for overseas borrowings by state-run companies and banks, along with a free hedging facility for banks raising foreign currency deposits.
The RBI received nearly $73 billion through these schemes between June 5 and August 21, including around $65 billion from non-resident Indian (NRI) deposits. Strong inflows prompted the central bank to advance the closure of its deposit hedging facility to the end of August.
For the week ended August 21, foreign currency assets increased by $9.48 billion to $591.33 billion, while the value of India’s gold reserves rose by $2.80 billion to $114.22 billion. Special Drawing Rights (SDRs) stood at $18.85 billion, while India’s reserve tranche position with the IMF rose to $4.93 billion.
Economists said RBI intervention in the foreign exchange market, including dollar purchases, has also contributed to the increase in reserves and helped offset the impact of overseas dollar inflows on the rupee.
