Surge in foreign exchange reserves

KOCHI: The Reserve Bank of India has stepped up market intervention to support the Indian rupee as the dollar strengthened against major global currencies. With this, a good increase was seen in the country's foreign exchange reserves in the first week of November. According to the Reserve Bank of India, foreign exchange reserves rose by $4.75 billion to $59,078 million last week. The value of RBI's gold reserves rose by $5.44 billion to $44.94 billion during the period. There is also an increase in the value of Special Drawing Rights (SDR) by one million dollars.

The country's foreign exchange reserves declined sharply after reaching an all-time high of $645 billion in October 2021. The Reserve Bank sold dollars to support the rupee as the value of the US dollar rose abnormally in the international market. While foreign investors have been withdrawing large amounts of money from the stock market, the RBI's intervention to stabilize the rupee has helped the dollar rally. Experts point out that the Indian economic sector is growing well and the inflow of foreign direct investment in the industrial sector will further increase foreign exchange reserves.

At the same time, the Federal Reserve, the central bank of the United States, may raise interest rates again as the threat of inflation is not completely eliminated. Therefore, it is estimated that the withdrawal of foreign investors will be strong in the coming days. The Reserve Bank is also focusing on increasing alternative investments, including gold, in its foreign exchange reserves due to concerns about the stability of the US dollar. The RBI is giving more emphasis to keep the value of the rupee stable so that the competitiveness of the country's export sector is not affected.