KOLKATA: India's foreign exchange reserves rose $4.1 billion to a record $421.915 billion in the week to February 2, Reserve Bank of India data showed. They have risen $20.5 billion since December 15, when the US Federal Reserve raised short-term interest rates by 25 basis points and raised the forecast for economic growth in 2018, suggesting that RBI kept purchasing dollars to sterilise inflows as foreign institutional investor (FII) flows remained strong in January at $3.5 billion.

"Continued increase in forex reserves has kept the rupee stronger," Care Rating said in a note on February 5. Reserves registered gains in every week since the US Fed raised rates.

The rupee, however, came under pressure in a week that saw the market fluctuating wildly. It closed Friday at 64.40 against the dollar, a two-month low, but higher than the year-ago 66.57.

Foreign currency assets, which capture the change in valuation of reserves held in other global currencies such as euros and pounds, rose $3.025 billion in the week under review to $ 396.769 billion.

Although RBI does not provide reasons for the change in forex reserves, the data suggest that the central bank purchased a sizeable amount of dollars during the week.

The value of reserves held in the form of gold rose $1.093 billion to $21.514 billion, RBI data showed.