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Wednesday, May 12, 2021

Forex Watch: Reserves post gains for second consecutive week

The gain during the report week was primarily due to a rise in foreign currency assets (FCA), a major component of the overall reserves.

By: ENS Economic Bureau | New Delhi |
April 25, 2021 1:57:00 am
FCA rose by $1.13 billion to $540.585 billion, weekly data from the Reserve Bank of India (RBI) on Friday showed. (File)

For the second consecutive week, the forex reserves recorded an increase, posting a rise of $1.193 billion to reach $582.406 billion in the week ended April 16, data from the RBI showed on Friday.

The gain during the report week was primarily due to a rise in foreign currency assets (FCA), a major component of the overall reserves.

FCA rose by $1.13 billion to $540.585 billion, weekly data from the Reserve Bank of India (RBI) on Friday showed.

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.

In the previous week ended April 9, the foreign exchange — or forex — reserves had swelled by $4.344 billion to $581.213 billion, after having fallen in the two weeks preceding that. The reserves had touched an all-time high of $590.185 billion during the week ended January 29.

Meanwhile, gold reserves during the week ended April 16 increased by $34 million to $35.354 billion.

The special drawing rights (SDRs) with the International Monetary Fund (IMF) rose by $6 million to $1.498 billion, the RBI data showed.

The country’s reserve position with the IMF rose by $23 million to $4.969 billion in the reporting week, as per the central bank data.

The rising forex reserves could bring some comfort to the government and the Reserve Bank in managing the nation’s external and internal financial issues at a time when the economy is facing Covid stress once again and it could have an impact on the GDP growth rate in fiscal 2021-22 as states are announcing lockdowns and curfews.

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