India’s Foreign Exchange Reserves Rise despite COVID-19

The Reserve Bank of India or RBI has released the latest data showing India’s foreign exchange reserves surged to US$584.107 billion. It presents an increase of US$1.701 billion in the reporting week ending on Friday, April 23, 2021.

In the previous week ending on Friday, April 16, 2021, India’s foreign exchange reserves had increased to US$582.406 billion, marking a US$1.193-billion increment. We find this latest news in the foreign exchange scene of India worth sharing.

We believe that our readers can understand how India’s forex market operates and can thrive despite the ongoing coronavirus or COVID-19 pandemic. India’s latest foreign exchange reserves status enables it to keep its position as the world’s fourth-largest foreign exchange reserves holder, despite the destructive onslaught of the COVID-19 pandemic’s second wave.

Furthermore, in the April 23 reporting week, the RBI data demonstrated that gold reserves were up by US$615 million to US$35.969 billion, based on the news posted online by Khaleej Times, a news outlet focusing on the happenings in the United Arab Emirates and the world.

The special drawing rights or SDR with the International Monetary Fund (IMF) surged by US$7 million to US$1.505 billion. India’s foreign exchange reserve position with the IMF increased by US$18 million to US$4.987 billion.

In the reporting week ending April 23, the RBI’s information revealed that the growth in foreign exchange reserves was an account of a surge in foreign currency assets or FCA. The latter are a major part of the overall foreign exchange reserves. Based on the RBI’s weekly data, the FCA grew by US$1.062 billion to US$541.647 billion.

The FCA is expressed in US dollar terms. They consist of the impact of depreciation and appreciation of non-US units, such as the Japanese Yen, Euro, and the British pounds sterling, held in the foreign exchange reserves.

India’s foreign exchange reserves had reached a lifetime high worth US$590.185 billion in the week that concluded Friday, January 29, 2021. During that time, India, the third-largest Asian economy, surpassed Russia, emerging as the world’s fourth-largest foreign exchange reserves holder.

For both India and Russia, foreign exchange reserves have mostly flattened out this 2021, following months of fast increase. As Russian holdings declined at a more rapid rate in recent weeks, India pulled ahead. This scenario comes as the RBI carried on hoarding US dollars to cushion the Indian economy against any sudden outflows.

We are pleased to learn that the Indian foreign exchange reserves surged to more than US$584 billion. This positive event in the forex scene is heartwarming, considering India is currently struggling with the COVID-19 emergency health crisis.

The Indian central bank holds foreign exchange reserves in foreign currencies. It uses these assets held on reserve to influence monetary policy and bank liabilities. Examples of foreign exchange reserves are foreign money the RBI holds.

The COVID-19 pandemic is responsible for the contraction of many countries’ economic growth. Nonetheless, the rising foreign exchange reserves are truly good news. They would provide considerable comfort to the RBI and the Indian government in managing the nation’s internal and external financial issues, especially during the pandemic time.

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