Forex kitty grows $3 billion to $480 billion on rising dollar, gold

TNN | Updated: Apr 25, 2020, 10:51 IST

(Representative image)

MUMBAI: India’s forex reserves rose by $3 billion during the week ended April 17 to $479.6 billion. Half the increase was because the value of gold held by the Reserve Bank of India (RBI) appreciated in dollar terms, while the other half came from an increase in the value of foreign currency assets, which rose to $441.9 billion.
Meanwhile, RBI data showed that during the first 10 days of April 2020, bank credit decreased by Rs 31,562 crore to Rs 193.3 lakh crore, while bank deposits increased by nearly Rs 1.5 lakh crore to Rs 137.1 lakh crore.
During the week ended April 10, currency with public rose by a record Rs 49,554 crore to a new high of Rs 23.9 lakh crore, partly because of withdrawal of government transfers made to Jan Dhan Yojana accounts to alleviate distress.
Overall, foreign exchange reserves are still only $7 billion below the all-time high of $487 billion as on March 6. In the week ended April 10, reserves rose by $2 billion to $476 billion. Forex reserves include foreign currency assets, gold and drawing rights with multilateral institutions.
Gold reserves increased over $1.5 billion to $32.7 during the week as prices soared with the yellow metal being a safe haven in the market turmoil after Covid-19. While the RBI has been using its reserves to defend the rupee, the reason for the latest increase is not known.
The RBI holds foreign currency assets in dollars and other hard currency like the euro and yen. The central bank uses a host of instruments to intervene in the foreign currency markets, including transacting in the spot, forward and, more recently, in offshore markets. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.