India's Foreign Exchange Reserves Surge $9.1 Billion To Reach 20-Month High Of $616 Billion

India's foreign exchange (FX) reserves rose for the fifth consecutive week ending December 15, hitting an over 20-month high of $615.97 billion- the highest level since March 2022, according to the data released by the Reserve Bank of India on Friday.

The spike in India's forex reserves was seen amidst heavy inflows in Indian debt and equity markets, and decrease in imports, and a softening in crude oil prices, according to market participants. Indian debt and equity market witnessed increased net inflows in December. Till now, the net inflows have swollen to $9.2 billion in December. The amount stood at $2.9 billion in November.

The country's forex reserves surged by $9.11 billion during the week, which according to market observers is one of the highest weekly increases ever and the second highest in FY24 so far.

In the earlier week ended December 8, reserves had increased by $2.82 billion to $606.86 billion, as per the RBI data.

Within reserves, foreign currency assets rose by $ 8.35 billion to $545.05 billion as of December 15, whereas gold reserves increased $446 million to $47.58 billion. Special Drawing Rights (SDRs) jumped $135 million to $18.32 billion. Meanwhile, as per the data, India's reserve position with the IMF stood at $5.02 billion, $181 million higher on the week.

Foreign exchange reserves are mostly dependent on the RBI's activity in the forex market and valuation changes in the currencies held. They had touched an all-time high level of $645 billion in October 2021.

For the week ended December 15, the rupee closed at 83.03 against the US Dollar, up by 27 paise compared to the previous close of 83.30 and higher by 37 paise on a weekly basis, largely on the back of a decline in the dollar index.

According to Reuters, the Indian rupee posted its biggest weekly loss in over two months, even as it closed stronger on Friday tracking a rise in its Asian peers and aided by dollar sales from large foreign banks.

The domestic unit closed at 83.14 against the U.S. dollar, compared to its previous close at 83.2775.