The country’s foreign exchange reserves touched a life time high of $555.12 billion after it surged by $3.615 billion in the week ended October 16, according to RBI data.
In the previous week ended October 9, 2020, the reserves had increased by $5.867 billion to reach $551.505 billion.
During the latest reporting week, the rise in total reserves was due to a sharp rise in Foreign Currency Assets (FCAs), a major component of the overall reserves. FCA jumped by $3.539 billion to $512.322 billion, the data showed.
Expressed in dollar terms, FCAs include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Gold reserves were up by $86 million in the reporting week to $36.685 billion.
The special drawing rights with the International Monetary Fund (IMF) remained unchanged at $1.480 billion during the reporting week.
The country’s reserve position with the IMF declined by $11 million to $4.634 billion during the reporting week, as per the data.
Alongside this jump in FDI and FPI inflows, the reserves have been supported by a dip in import bill on account of low crude oil prices, decline in gold and other imports on account of the Covid-19 pandemic.
While rising foreign exchange reservex provide cushion to the economy in terms of covering the import expenditure, it also provides stability to the domestic currency against the dollar.
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