India's forex reserves jump $8 bn to fresh all time high of $709.41 bn

India’s foreign exchange reserves rose sharply by USD 8.053 billion to a fresh all-time high of USD 709.413 billion during the week ended January 23, according to data released by the Reserve Bank of India (RBI) on Friday. In the previous reporting week, the country’s forex reserves had surged by USD 14.167 billion to USD 701.36 billion.The latest increase comes after a period of pressure on reserves, when currency buffers were deployed to curb excess volatility in the rupee amid episodes of sharp depreciation. The reserves had earlier touched a record high of USD 704.89 billion in September 2024 before moderating in subsequent weeks.
Foreign currency assets (FCAs), the largest component of the reserves, increased by USD 2.367 billion to USD 562.885 billion during the reported week. FCAs, expressed in dollar terms, reflect the impact of movements in major non-US currencies such as the euro, pound sterling and Japanese yen held in the reserves.Gold reserves registered a sharp rise, increasing by USD 5.635 billion to USD 123.088 billion, the RBI data showed. Special Drawing Rights (SDRs) with the International Monetary Fund rose by USD 33 million to USD 18.737 billion, while India’s reserve position with the IMF increased by USD 18 million to USD 4.703 billion.
Meanwhile, the rupee witnessed heightened volatility on Friday, hitting an intraday record low of 92.02 against the US dollar before recovering to close 6 paise higher at 91.93. The domestic currency had ended flat at 91.99 on Thursday, its previous lowest closing level.Forex traders attributed the intraday weakness to a firm US dollar and geopolitical uncertainties, while recovery was supported by a decline in crude oil and commodity prices. “The Indian rupee recovered from all-time lows on an overnight decline in crude oil and commodity prices. However, recovery in the US dollar index and FII outflows capped sharp gains,” said Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan.
The dollar index, which tracks the greenback against a basket of six major currencies, was trading 0.45 per cent higher at 96.57, while Brent crude fell 0.96 per cent to USD 70.03 per barrel in futures trade.In the domestic equity market, benchmark indices ended lower, with the Sensex falling 296.59 points, or 0.36 per cent, to close at 82,269.78, while the Nifty declined 98.25 points, or 0.39 per cent, to 25,320.65. Despite the market decline, foreign institutional investors turned net buyers, purchasing equities worth Rs 2,251.37 crore, according to exchange data.The Economic Survey, tabled in Parliament on Thursday, observed that the rupee is currently performing below its potential and noted that investor hesitation toward India merits closer assessment, particularly at a time when inflation is contained and the growth outlook remains favourable.

(Business Correspondent)