Forex reserves at near 2-month high, rises by $1.23 billion to $596.28 billion

India's forex exchange (forex) reserves jumped by $1.229 billion in the week that ended on July 7, totaling $596.280 billion, as per RBI's data. Now, the country's reserves are at nearly a 2-month high. This will also be the second-consecutive weekly rise in reserves. In the week under review, except for a slight dip in SDRs, all other components of reserves picked up.

Data from RBI, forex reserves jumped by $1.229 billion to $596.280 billion in the week that ended on July 7, 2023. Prior to this week, reserves rose by $1.853 billion.

Foreign currency assets (FCA), which is the biggest component of reserves, zoomed by $989 million to $528.968 billion in the week that ended on July 7. In the previous week, the surge was much higher by $2.539 billion.

Furthermore, in the week that ended on July 7, 2023, gold reserves grew by $228 million to $44.060 billion, while reserve position in the IM came in at $5.017 billion up by $15 million on a week-on-week basis.

On the other hand, SDRs dipped by a meager $4 million to $18.235 billion in the week ending on July 7, 2023.

India's forex reserves were at an all-time high of $645 billion in October 2021. Meanwhile, the foreign exchange reserves stood at $ 578.4 billion as on March 31, 2023.

To cushion rupee depreciation, RBI has been intervening in the forex market via both spot and forward positions.

On Friday, the Indian rupee settled slightly lower against the US dollar, however, witnessed its best week in four on the back of selling in the greenback as expectations of the Federal Reserve's rate hike nearing its end, stirred optimism.

At the interbank forex market, the rupee ended at 82.1615 per dollar. Overall, in the trading week that ended on July 14, 2023, the rupee picked up by 0.5%.

Talking about the rupee performance, Jateen Trivedi, VP Research Analyst at LKP Securities said, "Rupee opened positive at 81.94 up 0.10rs as dollar index fell below 99.30$ giving strong support to rupee, but short covering in dollar index was observed from 99.25 to 99.65 which gave rupee buyers reason to book profit at 82.00 odd levels. Rupee after initial high of 81.94 saw a sharp fall towards 82.21 as dollar index rallied from lows of 99.25 to 99.65$ along with higher Crude prices rupee found less support due to rise in Crude. Rupee range can be seen between 81.85-82.40."