After falling for two consecutive quarters, the country’s foreign exchange reserves surged by $6.56 billion, the biggest weekly gain in more than one year, to $531.08 billion in the week ended October 28, the Reserve Bank’s data showed on Friday. The reserves had declined by $3.84 in the week ended October 21 and by $4.5 billion in the week ended October 14. There was a marginally increase of $204 million in the week that ended on October 7. The foreign currency assets (FCA), a major component of the overall reserves, rose by $5.77 billion to $470.84 billion in the reporting week. Even gold reserves increased by $556 million to $37.76 billion. Experts said the surge in the reserves during the reporting week was on account of valuation gains arising out of depreciation of the US dollar against major currencies. The US Dollar Index (DXY) has fallen from around 112 at the beginning of October to around 111 at the end of the month. The index is a measure of the value of the greenback against six major currencies — the Euro, UK Pound, Canadian Dollar, Japanese Yen, Swedish Kroner and Swiss Franc. The country’s foreign exchange reserves have depleted by over $110 billion in last 14 months. It had touched an all-time high of $642.45 billion in the week ended September 3, 2021. The decline in the reserves was mainly on account of change in valuation arising from an appreciating US dollar, the RBI governor Shaktikanta Das had said in September this year. The RBI’s intervention in the forex market to curb volatility in the rupee, which depreciated by around 11 per cent in 2022, has also resulted in depletion of the country’s foreign exchange reserves. Meanwhile, the RBI’s report on management of foreign exchange reserves for April-September 2022, released today, showed that at end of June 2022, foreign exchange reserves cover of imports (on balance of payments basis) declined to 10.4 months from 11.8 months at end-March 2022. As of end-September 2022, the RBI held 785.35 metric tonnes of gold (including gold deposits of 41.57 metric tonnes). While 447.30 metric tonnes of gold was held overseas in safe custody with the Bank of England and the Bank of International Settlements (BIS), 296.48 metric tonnes of gold is held domestically, it said. In value terms (USD), the share of gold in the total foreign exchange reserves increased marginally from about 7.01 per cent as at end-March 2022 to about 7.06 per cent as at end-September 2022, the report showed.
