India’s foreign exchange reserves hit historic high

Mumbai: India’s foreign exchange reserves rose for a third consecutive week and hit a record high of $648.70 billion as of May 17, data from the central bank showed on Friday.

The reserves rose by $4.55 billion in that week, the biggest jump in two months. They were up by a total of $6.23 billion in the previous two weeks.

The Reserve Bank of India (RBI) intervenes in the foreign exchange market to curb excess volatility in the rupee.

Changes in foreign currency assets are caused by the RBI’s intervention as well as the appreciation or depreciation of foreign assets held in the reserves.

The RBI is changing the way it seeks to limit rupee’s volatility with the use of non-deliverable forwards now overtaking spot market interventions, which draw heavily on foreign exchange reserves, sources said.

Foreign exchange reserves also include India’s reserve tranche position in the International Monetary Fund.

For the week to which the foreign exchange data pertains, the rupee traded in a narrow range of 83.3250 to 83.5300 against the dollar, and logged weekly gains of about 0.2%.

The currency settled at 83.0975 against the U.S. dollar on Friday, and logged its biggest weekly gain in over five months.