Forex Reserves Rise To $629.56 billion For The Week Ahead Of Budget

India's foreign exchange reserves rose to $629.56 billion for the week ended Jan. 24, as per the data released by the Reserve Bank of India on Friday. The increase follows a seven-week decline in reserves.

The country's forex kitty rose $5.57 billion over the previous reporting week when it had dropped to an 11-month low of $623.98 billion, according to the data.

The rise can be attributed to robust central-bank intervention in the currency market to support the rupee amid a strong dollar. The RBI typically sells dollars from its reserves when the local currency is under pressure to curb excessive volatility.

The Indian rupee closed flat against the US dollar on Friday at 86.62. The domestic currency opened flat against the US dollar, starting at 86.63. It had weakened by seven paise to close at 86.63 on Thursday, according to Bloomberg data.

The rupee's weakness comes amid ongoing global economic concerns and market volatility. Despite efforts by the Reserve Bank of India to support liquidity through special measures, including open market operations and forex market interventions, the currency remains under pressure due to external uncertainties. These measures are expected to infuse about Rs 1.5 lakh crore into the banking system, but the rupee continues to face challenges.

For the week ended Jan. 24, foreign currency assets—a major component of the reserves—rose to $537.89 billion, according to the RBI data. In comparison, it stood at $533.1 billion at the end of the preceding week.

In dollar terms, foreign currency assets include the effect of the appreciation or depreciation of non-US units like the euro, pound and yen held in foreign exchange reserves.

Meanwhile, gold reserves increased to $69.65 billion from $68.94 billion in the week ended Jan. 24, the RBI data showed.