Amid heavy inflows in Indian debt and equity markets, India’s foreign exchange reserves rose for the fifth straight week, reaching an over 20-month high of $615.97 billion as of December 15, according to the data released by the Reserve Bank of India on Friday.
The reserves rose by $9.1 billion in the reporting week after a jump of $16.5 billion in the prior four weeks. It is worth noting that the Indian debt and equity market witnessed increased net inflows in December. Till now, the net inflows have swollen to $9.2 billion in December. The amount stood at $2.9 billion in November.
The Reserve Bank of India’s intervention in forex markets along with valuation changes impact reserves. Changes in foreign currency assets are expressed in dollar terms. It also reflects the effect of appreciation or depreciation of other currencies held in its reserves.
Foreign exchange reserves also included India’s Reserve Tranche position in the International Monetary Fund. Meanwhile, the rupee hovered between 82.9400 and 83.4050 against the dollar during the period coinciding with the week forex reserves data pertains. The Indian currency made its biggest weekly gain since Aug. 25. The currency settled at 83.14 on Friday, and posted its biggest weekly loss in over two months.
This week, the Indian rupee continued to remain under pressure due to rising crude oil price triggered by evolving geopolitical situation and outflow of foreign funds, forex traders told PTI. Moreover, the dollar remained weak this week.
“The dollar index trending weak has been a major support for rupee as dollar has fallen from 104 to 101.70 in a matter of 10 sessions. However, the overall trend for the rupee remains sideways within the range of 82.90-83.40 zones, ” the news agency quote Jateen Trivedi, VP Research Analyst at LKP Securities.
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