India's foreign exchange reserves rise nearly $50 billion since July
Key Takeaways
- •India’s foreign exchange reserves have risen by almost $50 billion since July.
- •Reserves increased by more than $9 billion in the week ended August 14.
- •Foreign currency assets and gold holdings were the main drivers of the increase.
- •Weekly reserve changes can be affected by exchange-rate moves and gold prices as well as RBI operations.
- •Banks received substantial funds through special deposit schemes and borrowing measures, adding liquidity to the banking system.
India's foreign exchange reserves have increased by almost $50 billion since July, according to the source article. The build-up has been driven by foreign currency assets and gold holdings, the two largest components of the reserves, which are managed by the Reserve Bank of India (RBI) and reported weekly. In the week ended August 14, reserves rose by more than $9 billion, with foreign currency assets and gold reserves making a significant contribution to the overall gain.
The weekly numbers can also move on valuation alone: foreign currency assets are held in currencies such as the euro, pound sterling and yen alongside the dollar, so exchange-rate shifts affect the reported total apart from the RBI's own market operations, while the gold component reflects prevailing gold prices. The reserve stock serves as India's buffer against external shocks and is used by the central bank to smooth excessive volatility in the rupee, and the country's holdings rank among the largest in the world after those of economies such as China and Japan.
The article also said banks received substantial funds through special deposit schemes and borrowing measures, flows that add to banking-system liquidity.
