India’s foreign exchange reserves stand at $657.89 billion

Mumbai, Nov 23: India’s foreign exchange reserves stood at $657.89 billion while the gold component of the kitty was valued at $65.75 billion, as of November 15, according to official figures released by the RBI on Friday. India’s foreign exchange reserves were at $675.65 billion on November 8 but since the RBI has been releasing dollars in the market to prop up the rupee, the reserves have come down by $17.7 billion, according to market analysts.

The SDR component of the forex kitty was at $18.06 billion. The country’s foreign exchange reserves have overall risen by $11.5 billion in the current financial year. India’s foreign exchange reserves had soared to an all-time high of $704.885 billion at the end of September taking the country to the 4th position globally after China, Japan, and Switzerland in the size of its forex kitty. This reflects the strong macroeconomic fundamentals of the economy.

The RBI uses the forex reserves to control the volatility in the rupee which results as hot money from the stock market flows out when foreign investors sell shares. Meanwhile, Reserve Bank Deputy Governor Rabi Sankar said at a media event recently that the RBI is well equipped to handle excessive exchange rate volatility that could result as a fallout of the Donald Trump presidency. The RBI releases dollars in the market in case the rupee falls sharply to prevent it from going into free fall. This helps to maintain stability in the Indian currency. Robust foreign exchange reserves help to make these operations easier and strengthen the rupee.