India’s foreign exchange reserves rose over $2 billion in the week ending June 24 after falling for three weeks in a row, as the dollar stuttered against most major currencies even as the rupee’s plunge to new record lows continued.
The country’s forex reserves rose by $2.735 billion to $593.323 billion during the week ending on June 24, from $590.588 billion in the prior week, according to the latest Reserve Bank of India’s weekly supplement data.
While the rupee hit a series of all-time low levels against the dollar during that week, the shine of the greenback’s allure was off somewhat against its major peers that week, as investors recalibrated inflation and rate hike risks on weakening demand outlook.
That boosted the country’s import cover.
In the week ending June 24, foreign currency assets (FCAs), a significant portion of total reserves, rose by $2.334 billion to $529.216 billion, and gold reserves rose by $342 million to $40.926 billion, according to the RBI.
FCAs, expressed in dollar terms, take into account the impact of appreciation or depreciation of non-US currencies held in foreign exchange reserves, such as the euro, sterling, and yen.
However, the dollar has regained its supremacy, and the rupee’s plunge to lifetime lows has continued unabated. So, the country’s import war chest risks are still tilted more to the downside.