(Bloomberg) — India’s dollar stockpile had its biggest weekly gain in over three years, bolstered by the Reserve Bank of India’s currency swap operations last month.
Foreign exchange reserves grew by $15.3 billion to nearly $654 billion in the week to March 7, data released on Thursday showed. That is the highest weekly gain since Aug. 27, 2021, according to Bloomberg-compiled data.
This comes after the central bank injected $10 billion through a foreign-exchange swap auction on Feb. 28, stepping up efforts to ease a cash crunch in the financial system. The swap entails the central bank purchasing dollars from banks against the rupees they hold, while contracting to sell the greenback at a future date.
“The swap essentially adds to reserves and would imply a similar amount of draw-down when the swap matures,” said Sakshi Gupta, principal economist at HDFC Bank. “The reserves are also supported by valuation gains due to increase in gold prices,” she said.
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