Forex reserves up $3.51 billion to $694.2 billion in the week when rupee hit record low
MUMBAI: In the week ending August 29 that saw the rupee touching a record low of 88.36 (last Friday), the forex reserves rose by an unlikely $3.51 billion to $694.2 billion, according to the weekly data from the Reserve Bank of India, released Friday.
In the previous reporting week ending August 22, the reserves had fallen by $4.38 billion to $690.72 billion.
This latest rise was driven by an increase in foreign currency assets, gold reserves (as the bullion was on a record run) and special drawing rights.
It may be noted that despite the steep GST cuts, both the currency and the stock markets are still not reflecting the optimism of the rest of the economy. While Dalal Street is not getting sustained momentum, with wild fluctuations through the trade session, the rupee has not regained strength from the macro developments.
Accordingly, even on Friday, the rupee lost 11 paise against the greenback to close trade at 88.32, its second worst.
The currency market was abuzz with regular RBI intervention during the reporting week as the rupee plumbed new lows. The RBI, which does not have an official level for the rupee, however intervenes regularly in the forex market to manage rupee volatility, focusing on maintaining orderly market conditions.
The RBI said for the week ending August 29, foreign currency assets, which are the largest component of the reserves, rose by $1.68 billion to $583.94 billion. Foreign currency assets also reflect the impact of movements in non-US currencies such as the euro, pound and yen held in the reserves.
Gold reserves rose by $1.76 billion -- one of the highest weekly spikes -- standing at $86.76 billion during the reporting week. Meanwhile, the special drawing rights also rose in the last week by $40 million to reach $18.77 billion while the country’s reserve position with the International Monetary Fund (IMF) also rose by $18 million to stand at $4.74 billion.