Foreign exchange reserves as on March 4 rose by $4.07 billion from a week ago to $350.863 billion, according to data from the Reserve Bank of India.
This is the highest weekly rise in forex reserves since May 2015, Bloomberg data showed. With the government deciding to stick to the 3.5% fiscal deficit target for FY17, sell-off by foreign portfolio investors (FPIs) in Indian equities took a break and the rupee halted its fall against the greenback.
With the appreciation in the currency, the central bank is believed to have shored up its reserves that had seen some decline in the week before.
Foreign currency assets (FCAs), which form a key component of the reserves, rose by $2.44 billion from the previous week to $327.475 billion.
FCAs are maintained in major currencies such as US dollar, euro, pound sterling, Japanese Yen, etc. However, foreign exchange reserves are denominated and expressed in US dollar only.
Movements in FCAs occur mainly on account of purchase and sale of foreign exchange by the RBI in the foreign exchange market in India, income arising out of the deployment of the foreign exchange reserves, external aid receipts of the Central Government and revaluation of the assets.
Gold reserves increased to $19.324 billion, up by $1.62 billion. Special drawing rights (SDR) from the International Monetary Fund fell by $0.5 million from the previous week to $1.479 billion.
SDR is an international reserve asset created by the IMF and allocated to its members in proportion of their quota at the multilateral agency.
The country’s reserve position in the IMF stood at $2.58 billion as on February 26, down $0.6 million from the previous week.