The Reserve Bank of India’s foreign exchange reserves jumped $12.8 billion to $572.80 billion in the week ended March 17, registering the highest rise since the week ended November 11, 2022.
At present levels, the RBI’s reserves are at their highest level since February 3, 2023.
The rise in the reserves last week was primarily on account of a sharp increase in the RBI’s foreign currency assets, which jumped $10.49 billion to $505.35 billion, showed latest central bank data.
In the week ended March 17, the rupee weakened 0.6 per cent against the US dollar. The previous week was a volatile one for the rupee as the crisis in the US banking sector sparked sharp movements in the US dollar index.
While global risk aversion benefited the safe-haven US dollar, expectations of the Federal Reserve slowing down rate hikes in the face of financial sector turmoil weighed on the greenback.
“As of February 2023, India held the fifth largest foreign exchange reserves in the world. India’s foreign exchange reserves recorded a decline of US$ 11.7 billion in February 2023 and stood at US$ 560.0 billion as on March 10, 2023 covering more than nine months of imports projected for 2022-23,” the RBI staff wrote in the March 2023 Bulletin.
The RBI’s reserves had reduced by $100 billion from February to September of 2022, partially due to dollar sales as the central bank sought to shield the rupee from excess volatility amid the Ukraine war and the Fed’s tightening cycle.