India's Foreign Exchange Reserves Marked Biggest Weekly Jump Since August 2021 To $544.715 Bn

India's foreign exchange reserves marked the biggest weekly jump since August 2021. RBI informed that the foreign exchange reserves increased by a whopping $14.72 billion to $544.715 billion, in the week ended November 11, 2022. Many analysts expected this weekly jump as the US dollar index recently lost momentum and the RBI is increasing its reserves primarily from revaluation gains. On the back of this, the Indian central bank is also probably having some opportunistic buying.

Earlier, the RBI earlier informed that in the week ending October 28, the foreign exchange reserves had gained $6.56 billion to $531.08 billion, then the biggest weekly gain since September 2021. During the said week, the gain was fuelled by the softer US dollar along with certain changes in the central bank's forward book.

However, now the RBI is giving efforts to restrict the rupee's fall and valuation impact, which had almost emptied the foreign exchange reserves significantly. According to the central bank's data, the spot forex reserves have fallen from $607 billion in end-March, which went down by $97.73 billion from the record high of $642.45 billion, recorded on September 3, 2021. However, in the week ending Oct. 21, the foreign reserves were even worse when it fell by $117.93 billion to an over 2-year low of $524.52 billion. Additionally, the forex reserves had depleted for 11 weeks out of 13 till last week.

The Weekly Statistical Supplement released by RBI mentioned that the rise in foreign exchange reserves can be attributed to a jump in Foreign Currency Assets (FCA). FCA consists of the effect of appreciation or depreciation of non-US currencies like the euro, pound, and yen held in the foreign exchange reserves. Foreign currency assets increased $11.8 billion to $482.53 billion for the week ending Nov 11, while gold reserves increased $2.64 billion to $39.70 billion.

Additionally, INR was also witnessing a better outlook in the week ended Nov 11, as INR jumped 2% last week, and marked its best weekly performance in about 4 years. The cooling down of the US currency, triggered by the softer-than-expected U.S. inflation data, helped INR to gain momentum.