The rise in the reserves last week was driven by an increase in the RBI’s foreign currency assets, which rose $5 billion to $519.4 billion, latest data showed. The central bank’s gold reserves declined by $494 million to $45.6 billion last week.
Analysts said that the RBI had likely purchased dollars last week amid weakness in the US dollar. The rupee appreciated 0.2% versus the US dollar in the previous week.
“The rupee is hovering near a three-month high following a weaker greenback. The central bank aggressively added nearly $5 billion in foreign currency assets in the week ended April 28 to absorb unwarranted shocks from a few US bank failures,” HDFC Securities research analyst Dilip Parmar said.
“So far this year, the forex kitty is up by nearly $26 billion even after net foreign fund outflows from Indian equities. Looking at the global uncertainty and expectation of corporate debt issuance inflows, the central bank may continue adding reserves,” he said.
RBI staff wrote in the central bank’s April Bulletin that reserves worth $548.8 billion as on April 7 were sufficient to cover 9.9 months of imports projected for the current fiscal year.
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