Forex reserves rise for 4th straight week to hit the highest level since July 2022

According to the Reserve Bank of India's (RBI) data supplement released on Friday, India's foreign exchange reserves climbed for a second consecutive week to reach a total of $586.41 billion, a level not seen in more than nine months. That is a $1.65 billion gain from the prior week. The total reserves grew by USD 6.306 billion to USD 584.755 billion over the previous reporting week. The highest point since July 2022 has been reached after a 4th straight week of upward mobility. 

According to the Weekly Statistical Supplement published by the RBI, the foreign currency assets, a significant part of the reserves, grew by USD 2.204 billion to USD 516.635 billion for the week ending April 14. The value of the gain or depreciation of non-US currencies like the euro, pound, and yen held in foreign exchange reserves is included in the foreign currency assets, determined in dollar terms. According to statistics from the apex bank, the nation's reserve position with the IMF grew by USD 12 million to USD 5.19 billion during the reporting week.

Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas said “India’s forex reserves rose for the second consecutive week. It increased by $ 1.657 bn to $586.412 bn from $584.76 bn on April 14, 2023 amid RBI’s intervention in the forex markets to maintain stability in the domestic currency. Forex reserves rose to the highest levels in 9-months.”

According to the RBI, gold reserves dropped by USD 521 million to USD 46.125 billion. According to the central bank, the Special Drawing Rights (SDRs) dropped by USD 38 million to USD 18.412 billion. 

The rupee headed in a range of 81.77 to 82.15 for the reporting week, ending the week slightly higher versus the dollar. The rupee's four-week upward trend came to an end on Friday in the week ending April 21 when it finished at 82.09.

“The 4QFY23 earnings season will pick up pace in the coming weeks.  Meanwhile, mixed signals are emerging from the US, Europe and Chinese economic data. Inflation although declining, continues to run high in US and Europe. Initial signs of recession are emerging from the US jobs data and the TCS and Infosys management commentary. In India, inflation has eased while growth is steadily picking up pace led by accelerated govt capex and PLI investments. Services exports are strong offsetting the slowdown in the merchandise exports and boosting India’s forex reserves. In the coming weeks, investors will parse the earnings outcome of the March quarter and closely follow the management commentary for further cues,” said Mitul Shah - Head of Research at Reliance Securities.

The rupee gained 8 paise to settle at 82.09 (provisional) versus the US dollar on Friday, rising for the second session in a row. The national currency started off well versus the US dollar at 82.11. The rupee had an intra-day-high 82.07 and a day-low 82.19. It ultimately recorded a gain of 8 paise over its previous close to complete the day at 82.09 against the US dollar. The dollar index, which measures the strength of the dollar against a basket of six different currencies, climbed 0.05% to 101.89.