The Reserve Bank of India’s latest Data showed that the Nation’s Forex reserves have surged to a historic peak of USD 642.631 Billion marking the 5th Consecutive weekly increase. The forex reserves expanded by USD 139 Million in the week ending on March 22. Notably, the gold reserves also witnessed a significant uptick reaching USD 51.487 Billion.
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Ups and Downs in Forex Reserves
As of the week ending March 22, India’s foreign exchange reserves witnessed a healthy increase of USD 6.396 billion. During the entire calendar year of 2023, the RBI managed to add about USD 58 billion to foreign exchange reserves, which is quite impressive. However, looking to 2022, it faces tough times as the foreign exchange reserves take a cumulative hit of USD 71 billion.
It is worth noting that in October 2021, India reached the highest point ever recorded in foreign exchange reserves, which was certainly a proud moment. Unfortunately, since then, been a decline, partly due to the rising costs of imported goods, throughout 2022.
RBI and Forex Management
The centre of management of foreign exchange reserves is the Reserve Bank of India (RBI), which intervenes strategically in the market to maintain stability. Foreign exchange reserves mainly consist of reserve currencies such as the US Dollar, Euro, Japanese Yen and Pound Sterling. RBI’s intervention, often through liquidity management and sometimes dollar sales, aims to prevent excessive volatility in the rupee against the dollar.
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Market Monitoring and Currency Management
The Reserve Bank of India is closely monitoring the foreign exchange markets and taking steps as necessary to keep things stable and prevent the currency from losing its value. They are not limited to specific target levels or ranges but are focused on maintaining overall market stability. As per the latest update, the Indian Rupee has settled at 83.40 against the US Dollar
