India’s Foreign Exchange Reserves Rise Nearly $1 Billion to $672.59 Billion
Mumbai — India’s foreign exchange reserves increased by $963 million to $672.59 billion in the week ended June 19, reversing the previous week’s decline, according to data released by the Reserve Bank of India.
The value of the country’s gold reserves rose by $4.11 billion to $107.93 billion during the week.
India’s holdings of Special Drawing Rights with the International Monetary Fund, however, declined by $52 million to $18.65 billion.
Despite recent volatility, India’s foreign exchange reserves remain among the largest in the world. They are below the record $728.49 billion reached in the week ended Feb. 27.
The reserves came under pressure in recent months following the outbreak of conflict in the Middle East, which prompted the RBI to sell dollars in the foreign exchange market to support the rupee.
The central bank this week also clarified operational rules governing Foreign Currency Non-Resident Bank deposits following questions from banks about raising such deposits and conducting related lending activities.
The RBI said banks may extend loans to FCNR-B account holders and place liens on their deposits, giving lenders greater flexibility in raising foreign currency funds from non-resident Indians.
Banks will also be permitted to conduct foreign exchange swaps with maturities of less than three years if they have raised fresh, eligible FCNR-B deposits with an original maturity of at least three years under the special scheme.
The RBI will provide banks with a plain buy-sell foreign exchange swap facility under the arrangement. The support will cover only the principal value of the deposits and exclude interest.
Market participants expect higher deposit rates, the RBI’s swap support and the operational clarifications to help attract additional inflows from non-resident Indians in the coming weeks. (Source: IANS)
