The reserves rose $6.56 billion to $665.4 billion as of March 28, the Reserve Bank said on Friday. This marks the highest level in nearly five months.
During the reporting weekend, the rupee appreciated by 0.6% against the dollar, supported by the renewed foreign investment in the Indian equities.
This means the central bank did not sell much dollars to defend the currency. March also saw the rupee making its best monthly gain in nearly seven months, since November 2018, gaining close to 2.3%. However, the currency closed the last fiscal with a loss of 2.46%.The foreign exchange reserves continue to gain, adding $6.596 billion to a five-month high of $665.4 billion in the week to March 28, according to the latest data from the central bank.
In the previous three weeks, the RBI cumulatively added $20.1 billion. According to the government, this can cover 11 months of imports and makes the country’s reserves the fourth largest in the world after China, which has over $3.3 trillion in its reserves, followed by Japan with $1.23 trillion, and the tiny Switzerland at the third place with $927 billion, which is 1.5 times of our forex reserve.
The rupee opened strong at 84.95 on Friday as the dollar index fell massively after the bloodbath on the Wall Street following the tariff war unleashed on Thursday. The rupee edged up in volatile trades, holding near three month high against the dollar and closed at 85.22, up 33 paise from the previous close. The dollar index currently quotes at 101.76, nearly at five month low.
The RBI said the reserves by $6.6 billion in the latest reporting week, following a cumulative increase of $20.1 billion over the previous three weeks. Movements in foreign currency assets within the reserves are influenced by the central bank’s market interventions and fluctuations in the value of foreign assets.