Foreign exchange reserves jumped to an all-time high of $372.7 billion as on April 28, breaking its previous record of $371.2 billion as on September 9, 2016, data released on Friday by the Reserve Bank of India showed.
Traders attributed the increase in reserves to the RBI’s intervention in the currency market to ease volatility in the rupee exchange rate. The rupee has gained 47 paise against the dollar since the beginning of the current fiscal. On April 26, the rupee appreciated to 69.93 rupees to a dollar, its highest level since August 10, 2015.
“It is largely because of the RBI’s dollar purchases to prevent a sudden rise in the rupee against the greenback. The rupee has been a strong performer, and the RBI wants to arrest a sudden appreciation. It has been active in the market intermittently,”said Debendra Dash, head ALM, Au Small Finance Bank.
Foreign exchange reserves increased by $1.6 billion during the week to April 28, higher than the $1.3-billion increase in the previous week, according to RBI data.
The central bank has always maintained that it does not want to influence the exchange rate for the rupee, but will take steps, including intervention in the spot market, to curb any extreme volatility.
Foreign currency assets (FCAs), a major component of the overall reserves, surged by $1.569 billion to $349.055 billion in the reporting week, the RBI said.
Expressed in US dollar terms, FCAs include the effects of appreciation/depreciation of non-US currencies, such as the euro, pound and the yen, held in the reserves. Gold reserves remained unchanged at $19.869 billion, the central bank said.
The special drawing rights with the International Monetary Fund were up by $8.5 million to $1.460 billion. The country’s reserve position with the fund, too, rose by $15.8 million to $2.347 billion, the RBI said.