Forex reserves rose by $932.4 million to $360.8 billion during the week ended January 20, led by a rise in foreign currency assets, the RBI data released on Friday showed.
Forex reserves rose by $932.4 million to $360.8 billion during the week ended January 20, led by a rise in foreign currency assets, the RBI data released on Friday showed. Forex dealers said the rise was primarily due to the rupee gaining vis-à-vis the dollar during the first half of the week under review. The rupee, which closed the previous week at 68.16 against the greenback, gained to 67.96 during the week. Some of the fall in the forex reserves during the previous weeks was due to depreciating foreign currency assets, some of which are held by the RRBI in the form of sovereign bonds of other countries.
However, during the week ended December 6, foreign currency assets (FCAs) increased by $926.4 million, driven by falling treasury yields of developed economies. The US 10-year treasury yield, which ended the previous week at 2.39%, fell 7 bps in the first two days of the week to 2.32%.
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The rupee’s fall in recent months was primarily due to the dollar’s phenomenal rise since US President Donald Trump’s election victory in early November. Trump’s spending plan for infrastructural development has pushed the market to factor in a higher probability of rate hikes by the US Federal Reserve.