The forex reserves posted an increase of $1.919 billion for the week ended October 29, reaching $642.019 billion amid a healthy increase in the currency assets and value of gold, as per data from the Reserve Bank of India (RBI).
In the previous week ended October 22, the foreign exchange — or forex — reserves had declined by $908 million to $640.1 billion.
With the latest boost, the overall reserves are in touching distance of the record level of $642.453 billion in the week ended September 3.
According to the RBI data released on Friday, foreign currency assets (FCA), a vital component of the overall reserves, rose by $1.363 billion to $578.462 billion for the reporting week.
Expressed in dollar terms, the FCA include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Value of the gold reserves increased by $572 million to $39.012 billion in the reporting week, the data showed.
The special drawing rights (SDRs) with the International Monetary Fund (IMF) rose by $17 million to $19.304 billion.
The country’s reserve position with the IMF rose by $1 million to $5.242 billion in the reporting week, according to the RBI data.
Higher reserves are a big cushion in the event of any crisis on the economic front and enough to cover the import bill of the country for a year. More reserves also help the rupee strengthen against the dollar. A rise in reserves will provide a level of confidence to markets that a country can meet its external obligations, demonstrate the backing of domestic currency by external assets, assist the government in meeting its foreign exchange needs and external debt obligations, and maintain a reserve for national disasters or emergencies. WITH PTI