Increase in Forex Reserves in India

Increase in Forex Reserves in India

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April 2, 2023

The Reserve Bank of India (RBI) reports that India's Foreign Exchange Reserves increased for a second week in a row, reaching USD 578.778 billion in the week that ended March 24.

What exactly are Forex Reserves? - Foreign currency assets held by nations' central banks are known as forex reserves. Special drawing rights (SDRs), monetary gold, and the IMF's reserve position are examples of these assets. Foreign Exchange Reserves are held primarily to make international payments and protect against exchange rate risks.

Indian Foreign Exchange Reserves: Recent Trends - The Forex reserves had increased by USD 12.8 billion the week before, bringing the total to USD 572.8 billion. The expansion available for later is chiefly credited to the ascent in unfamiliar money resources, which flooded by USD 6.48 billion to USD 536.99 billion in the week finished Walk 24. It is important to note that India's foreign exchange reserves reached a record high of $645 billion in October 2021, but that the central bank uses the reserves to protect the rupee from pressures brought on by global events.

Forex components - At USD 39.59 billion, gold reserves remained unchanged. India's reserve position with the International Monetary Fund (IMF) decreased by USD 47 million to USD 5.71 billion as the special drawing rights decreased by USD 6 million to USD 1.53 billion.

India's GDP growth is likely to slow to 6.3% in Fiscal Year 24: A recent World Bank report predicts that India's GDP growth will slow to 6.3% on April 1 from 6.6% in fiscal year 2024. Consumption declines as a result of lower income levels are to blame for this drop. Experts, on the other hand, believe that India's high level of services exports, which reached a new high in the fourth quarter of 2021, will help to protect the economy from external risks because the global economy is slowing and is expected to hurt merchandise exports.

In the World Bank's India Development Update, retail inflation in India is anticipated to drop from 6.6% to 5.2% in the fiscal years 2023-2024. The country's Current Account Deficit (CAD) is predicted to reach 5.2% in FY24, according to the update. The third-largest economy in Asia saw year-over-year growth of 4.4% from October to December, down from 11.2% a year earlier and 6.3% in the previous quarter.

Source - The ET