Another big good news has come from the external front of the Indian economy. The country’s foreign exchange reserves have reached an all-time high, touching new heights. According to the data released by the Reserve Bank of India on Friday, a huge increase of $ 14.361 billion was recorded in the foreign exchange reserves in the week ending January 30, after which the total reserves have reached a historic level of $ 723.774 billion.
These figures, which came on the day of RBI’s monetary policy review, confirm the confidence expressed by the central bank governor on the strength of the economy. In the last week also, an increase of $ 8.053 billion was seen in the reserves.
Gold made record, currency assets fell
The main reason for this historic rise in foreign exchange reserves this week is not the dollar or the euro, but ‘gold’. Analysis of the data shows that this surge in reserves is entirely driven by revaluation of gold reserves and rise in prices.
• Gold Reserve: In the week under review, the value of gold reserves has seen a huge jump of $ 14.595 billion to $ 137.683 billion.
• Foreign Currency Assets (FCA): Interestingly, the largest component of reserves, FCA, has actually declined. Its value has decreased by $ 493 million to $ 562.392 billion. Apart from the dollar, FCA includes currencies like euro, pound and yen.
Position in SDR and IMF
According to RBI data, special drawing rights have increased by $216 million, taking it to $18.953 billion. At the same time, India’s reserve position in the International Monetary Fund has also increased by $44 million to reach $4.746 billion.
Meaning of strong reserves: Rupee will be stable
According to economists, this record level of foreign exchange reserves provides India with a strong cushion against global economic shocks.
• Support to Rupee: Whenever the rupee comes under pressure against the dollar, the RBI uses this huge reserve to intervene in the currency market and keep the exchange rate stable.
• Investor confidence: This continuous increase in reserves reflects the strong inflow of dollars into the country and the confidence of foreign investors. At the same time, it also strengthens India’s ability to pay import bills and facilitate foreign trade.
