India's forex reserves rise $6.1 bn to 2 month high of $682.35 bn

India's foreign exchange reserves rose by $6.1 billion to $682.35 billion in the week ended July 24, reaching their highest level in nearly two months, according to the data recently released by the Reserve Bank of India (RBI).The latest increase follows a $1.08 billion gain in the previous reporting week, when the country's forex reserves stood at $676.23 billion, reflecting a steady improvement in the nation's external financial position.
According to agency reports, India's forex reserves had touched an all-time high of $728.494 billion earlier this year in February. However, the reserves declined in the subsequent weeks due to heightened geopolitical tensions in the Middle East, which put pressure on the rupee and prompted the RBI to intervene in the foreign exchange market through dollar sales to curb excessive currency volatility.
The largest component of the reserves, foreign currency assets (FCAs), increased by $4.8 billion to $555.92 billion during the reporting week. FCAs, expressed in US dollar terms, reflect the impact of movements in non-US currencies such as the euro, pound sterling and Japanese yen held in the country's foreign exchange reserves.Gold reserves also recorded a strong increase, rising by $1.3 billion to $103.05 billion, highlighting continued strength in India's reserve assets.
Meanwhile, Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) declined by $53 million to $18.61 billion. India's reserve position with the IMF also slipped marginally by $11 million to $4.75 billion, according to the RBI data.The rise in reserves provides a stronger buffer against external shocks and enhances the RBI's ability to manage volatility in the foreign exchange market. Robust forex reserves are also seen as a key indicator of India's external sector resilience, supporting investor confidence and the country's ability to meet its import and external debt obligations.The latest build-up comes amid improving capital inflows and continued efforts by the central bank to maintain stability in the rupee despite global economic uncertainties.

(Business Correspondent)