India's forex reserves surge to record high of $648.7 billion

In an impressive display of economic resilience, India's foreign exchange reserves have climbed to a record high of $648.7 billion. The sustained increase over seven consecutive weeks underscores positive growth of the Indian economy and its strong external position, supported by multiple factors including increased foreign investment inflows, a stable currency, and strategic management of the reserves by the RBI.
Recently in a report published by Reserve Bank of India (RBI) on, India’s forex reserves surged by $4.54 billion to $648.7 billion as of May 17. This follows a surge of $2.56 billion in the previous week. Foreign currency assets (FCAs) also increased by $3.361 billion to $569.01 billion. Gold reserves increased by $1.24 billion to $57.19 billion, while SDRs rose by $113 million to $18.16 billion, stated RBI. Reserve position in the IMF decreased by $168 million to $4.32 billion.
Continuous inflows from foreign direct investment (FDI) and foreign portfolio investment (FPI) have been pivotal. The steady investment influx indicates global investor confidence in India's economic prospects. Enhanced performance in key export sectors, including information technology, pharmaceuticals and textiles has generated substantial foreign exchange earnings, contributing to the reserves. Moreover,the central bank's proactive measures in managing the forex reserves and intervening in the foreign exchange market have played a crucial role in maintaining the upward trajectory.
Weekly Market Report
Indian equity indices registered strong gains, setting new records during the week ended on Friday,24 May,2024.The broader market underperformed the frontline indices during the period under review.The Nifty settled above the 22,950 mark and ,the Sensex gained 1404.45 points or 1.90% to settle at 75,410.39.The domestic equity market remained closed on Monday,20 May,2024 on account of Lok Sabha election 2024.
The Reserve Bank of India announced a transfer of Rs 2.11 lakh crore to the government for the financial year 2023-24. This represents the highest surplus transfer on record by the central bank, according to estimates.This surplus will be reflected in the government’s accounts for the financial year 2024 -25, providing a significant boost to the fiscal position.
According to information, India’s business activity continued to expand at a robust pace in May, with HSBC India’s Composite Output Index rising to 61.7 marking the third strongest growth in nearly 14 years. However, India’s HSBC India Manufacturing PMI slipped from 58.8 in April to 58.4 in May, reflecting the weakest improvement in the health of the sector for three months but one that remained strong by historical standards.HSBC Flash India Services PMI Business Activity Index stood at 61.4 in May as against 60.8 in April, according to estimates.

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As per reports,ITC rose 0.01%,the diversified conglomerate’s net profit declined marginally to Rs 5020.20 crore in Q4 FY24 as against Rs.5086.86 crore in Q4FY23.Power Grid Corporation of India increased 0.52%.The Reliance industries added 3.17%.The company entered into licensing agreement with Nel ASA for manufacturing Nel’s alkaline electrolysers in India and for captive purposes globally.ONGC advanced 1.29%,reporting a standalone net profit of Rs 9869.37 crore in Q4 FY24.
Global Markets:
In Japan, inflation moderated for the second consecutive month, as investors continued to assess the Bank of Japan’s capacity for further interest rate hikes this year.Core CPI which excludes volatile fresh food prices rose 2.2% year-on-year in April,according to recent data.
Initial jobless claims in the United States for the week ending May 18th came in at a higher than expected 2.15 lakh,while S&P Global Service Purchasing Managers Index (PMI) rose to a 12 month high of 50.9, according to information.

(Writer is a Finance Research Analyst, based in Gandhinagar, Gujarat)