India's Foreign Exchange Reserves Increase USD 7.26 Billion On Higher FCAs, Gold

New Delhi, Jul 11 (KNN) India's foreign exchange reserves increased by USD 7.26 billion to USD 674.19 billion in the week ended July 4, supported by higher foreign currency assets and gold reserves, according to data released by the Reserve Bank of India (RBI).

Foreign Currency Assets Drive Reserve Growth
Foreign currency assets (FCAs), the largest component of the reserves, rose by USD 4.51 billion to USD 545.58 billion. FCAs reflect the valuation impact of non-US currencies such as the euro, pound sterling and yen held in the reserve portfolio.

State Bank of India (SBI), in a research report, said the increase in foreign currency reserves indicated the RBI's efforts to rebuild its forex buffer.

Market participants said the central bank has been absorbing a significant share of dollar inflows, helping replenish reserves amid sustained foreign exchange inflows, reported Business Standard.

Gold reserves also increased by USD 2.67 billion to USD 105.21 billion during the week. Special Drawing Rights (SDRs) rose by USD 65 million to USD 18.62 billion, while India's reserve position with the International Monetary Fund (IMF) increased by USD 15 million to USD 4.79 billion.

RBI Rebuilds Forex Buffer After Earlier Decline
The latest rise follows a USD 5.65 billion decline in the previous reporting week. 

India's forex reserves had touched a record high of USD 728.49 billion in late February before moderating as the RBI intermittently sold dollars to curb volatility in the rupee. The central bank resumed dollar purchases in June as foreign exchange inflows strengthened.

Rupee Ends Week Largely Stable
Meanwhile, the rupee ended nearly unchanged at Rs 95.33 per US dollar on Friday, compared with Rs 95.38 in the previous session, supported by lower crude oil prices and a weaker US dollar.

However, the domestic currency weakened by around 0.1 percent during the week as geopolitical tensions in West Asia continued to weigh on market sentiment.

(KNN Bureau)