The Reserve Bank of India (RBI) said that foreign exchange reserves increased by $531.1 billion for the week ending October 28—the largest weekly increase since September 2021. Experts speculate that the huge increase of $6.6 billion in India’s foreign exchange reserves may have been caused by the delivery of US dollars from the Reserve Bank of India’s (RBI) forward contracts and the appreciation of other foreign currency assets against the dollar.
According to Bank of Baroda Chief Economist Madan Sabnavis, these factors, along with stronger export receipts, may have contributed to a higher forex chest during the festival week. According to him, the amount of foreign money coming in throughout the week was not significant enough to have an effect on the reserves. FPI inflows for the reviewed week totaled $550 million, based on information from the depositories.
According to Ashutosh Khajuria, executive director of Federal Bank, the increase may have been assisted by the appreciation of other currencies in the RBI reserves relative to US dollars. The central bank keeps the pound sterling, yen, and euro in addition to the US dollar in its foreign exchange reserves. These currencies are expressed in terms of US dollars, thus any appreciation will result in increased reserves.
Shaktikanta Das, governor of the RBI, previously stated that the revaluation of foreign currencies relative to the dollar was responsible for almost 67% of the loss in reserves. For the week ending October 14, forex reserves were at their lowest levels since July 2020, down from an all-time high of $645 billion in October 2021. According to the central bank’s report, on a balance of payments basis, foreign exchange reserves increased by $4.6 billion from April to June 2022 compared to $31.9 billion from April to June 2021.