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In the previous week ending August 1, foreign exchange reserves had fallen by $9.3 billion, mainly because the central bank likely intensified efforts to curb the rupee’s slide against the dollar.
“The rise in reserves is mainly on account of revaluation gains to the tune of around $10 billion due to a weaker dollar and rise in gold prices during the week under review. The gains were partially offset by RBI’s likely market intervention, including delivery of $5 billion of FX swaps,” said Gaura Sengupta, chief economist at IDFC First Bank.
Foreign currency assets, which form over 84% of the total reserves, rose by $2.4 billion during the week to August 8. These assets are maintained as a multi-currency portfolio comprising major currencies such as the US dollar, euro, British pound, and Japanese yen, but expressed in dollar terms.
Meanwhile, gold reserves, which are also part of the overall foreign exchange kitty, rose by $2.2 billion to $86.2 billion.
The RBI’s stated stance has been that it intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate.
