India’s foreign exchange reserves reached their highest level since early June, totaling $599.53 billion as of May 12, according to the Reserve Bank of India’s statistical supplement. This marks the third consecutive week of growth, with an increase of $3.55 billion from the previous week and a total rise of $11.7 billion over the past two weeks.
The Reserve Bank of India intervenes in the spot and forwards markets to prevent extreme fluctuations in the value of the rupee. Fluctuations in forex reserves can also result from gains or losses in valuation.
According to treasury officials and economists cited by Reuters, the optimistic outlook on the rupee held by several foreign banks is being challenged by the RBI’s continuous intervention to bolster reserves.
During the week in question, the rupee depreciated by 0.4% due to the overall strength of the dollar index. The rupee traded within a range of 81.6900 to 82.2250 against the dollar.
This week, the rupee experienced a further decline of 0.6%, marking its largest drop in two months. It concluded the week at 82.66 against the dollar.
