India’s forex reserves top $600 billion, rise to near 15-month high

By Siddhi Nayak

India’s foreign exchange reserves rose for a third straight week to total $609.02 billion as of July 14, the highest in nearly 15 months, data from the central bank showed on Friday.

They rose by $12.74 billion from the week earlier – the biggest gain in four months – having risen by a total of $3.08 billion in the prior two weeks.

“A major portion of the week-on-week jump in forex reserves is driven by revaluation gains due to dollar weakness and reduction in US Treasury yields,” said Gaura Sen Gupta, India economist at IDFC FIRST Bank.

The changes in foreign currency assets, expressed in dollar terms, include the effects of appreciation or depreciation of other currencies held in the Reserve Bank of India’s (RBI) reserves.

The rest of the rise is due to the RBI’s forex purchases in the spot foreign exchange markets, Sen Gupta said, adding that the central bank will keep the rupee in a tight range this year.

Foreign investors have bought a net of $16 billion in Indian equities in the last three months, data from the National Securities Depository Limited showed, allowing the central bank to buy from the market and build on reserves.

The current level of forex reserves, along with the RBI’s forward foreign exchange book of $19.3 billion, is enough to cover over 11 months of imports, Reuters’ calculations showed.

In the week for which the forex reserves data pertains, the rupee had logged its best week in four. It had traded in a range of 81.9300 and 82.6550 during the week.

The rupee ended at 81.9450 on Friday, up 0.1% for the week.