Forex kitty swells by USD 2.68 bn to USD 396 bn

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Mumbai: The country’s foreign exchange reserves jumped by USD 2.68 billion — one of the largest increases in recent months — to touch USD 396.084 billion in the week to January 4, driven by a rise in core currency assets and gold holdings, RBI data showed Friday.

The overall reserves had increased by USD 116.4 million to USD 393.404 billion in the previous reporting week.

In the reporting week, foreign currency assets, a major component of the overall reserves, rose by USD 2.215 billion to USD 370.292 billion.

Expressed in US dollars, forex assets include the effect of appreciation or depreciation of non-US currencies such as the euro, pound and yen held in the reserves.

The reserves had touched a record high of USD 426.028 billion in the week to April 13, 2018. Since then, the forex kitty has been fluctuating and mostly sliding.

One of the major reasons for the decline is that the central bank has been selling dollars in the market to contain rupee volatility. In the first five months of the current fiscal, the central bank has sold more than USD 34 billion to arrest the fall of the rupee, which had sniffed at 74 to a greenback earlier this fiscal.

The value of the gold reserves increased by USD 465.5 million to USD 21.689 billion in the reporting week, the apex bank said.

It can be noted that the RBI has been buying bullion after almost a decade. During its fiscal year ending June 2018, the RBI had added 8.46 metric tonnes of gold. The central bank now holds total 566.23 tonnes of the yellow metal.

The purchase was made to diversify the foreign currency assets, the RBI had said in its annual report.

However, the week saw the special drawing rights with the International Monetary Fund marginally decreasing by USD 0.1 million to USD 1.462.6 billion.

The country’s reserve position with the IMF also declined marginally by USD 0.1 million to USD 2.639 billion, the apex bank said.

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