India's Forex Reserves Soar To USD 641.59 Billion On RBI Intervention - Details
india’s forex reserves soar to usd 641.59 billion on rbi intervention – details
India’s foreign exchange reserves saw an increase for the first time in four weeks, signaling potential intervention by the country’s monetary authority to bolster its currency. According to data released by the Reserve Bank of India on Friday, the stockpile surged by USD 3.7 billion, reaching USD 641.59 billion as of May 3. This rise comes after the reserves hit a record high of USD 649 billion in early April but subsequently experienced a three-week decline.
Currency Interventions to Manage Rupee Volatility
The Reserve Bank of India employs currency interventions as a primary tool to mitigate volatility in the rupee. Concerns over rising borrowing costs in the United States have exerted pressure on Asian currencies, including the yen, the won, and notably, the rupee. In April, the rupee reached a record low of 83.5750 per dollar and has since hovered near that level. Data compiled by Bloomberg indicates a 0.1 per cent decline in the rupee for the week ending May 3.
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India’s Currency Management and Bond Inflows
India’s currency management practices hold significant importance, particularly as the country’s bonds are set to be included in JPMorgan Chase & Co. indexes starting June. This move is expected to attract substantial foreign capital inflows.
According to The Times of India report quoting Bloomberg, analysts at Barclays Plc, Shreya Sodhani and Amruta Ghare, anticipate that the central bank will be prepared to absorb these new debt inflows, rather than allowing the currency to appreciate significantly.
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