India’s Foreign Exchange Reserves Hit All Time Record High Of $645.58 billion

Foreign exchange reserves also include India's reserve tranche position in the International Monetary Fund. Apart from India's strong growth and inflows into equity and debt markets, the RBI has been absorbing inflows to build reserves.

India’s foreign exchange reserves rose for a sixth straight week and hit a lifetime high of $645.58 billion as of Mar. 29, as per the data released by the RBI after 5th April after Monetary policy meeting. The reserves increased by $2.95 billion in the reporting week, after having risen by a total of $26.5 billion in the previous five weeks.

What Role RBI Plays In Foreign Exchange Market?

If there is excess volatility in the rupee, the central bank intervenes in the foreign exchange market to control it. Another reason for changes in foreign currency assets are because of appreciation or depreciation of foreign assets held in the reserves.

Foreign exchange reserves also include India’s reserve tranche position in the International Monetary Fund. Apart from India’s strong growth and inflows into equity and debt markets, the RBI has been absorbing inflows to build reserves.

In the monetary policy, RBI Governor Shaktikanta Das said “It is our prime focus to build a strong umbrella, a strong buffer in the form of a substantial quantum of forex reserves which will help us when the cycle turns or when it rains heavily,”

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In the week that the foreign exchange data pertains, the rupee had hit a record low of 83.45 against the dollar, but clocked minor weekly gains.

The domestic currency settled at 83.2950 on Friday, up 0.1% this week.

RBI On Repo Rate In Monetary Policy

The Reserve Bank of India (RBI) Governor Shaktikanta Das announced the first bi-monthly monetary policy of the financial year 2024-25 today. The central bank kept the repo rate unchanged at 6.5%.

The RBI’s Monetary Policy Committee (MPC) voted by a 5:1 majority to keep key rates unchanged at 6.5%. The central bank also maintained the policy stance at ‘withdrawal of accommodation’, added RBI Governor Shaktikanta Das.

(With Inputs From Reuters)