India’s foreign exchange reserves has reached its highest level in a month $622.47 billion As of February 2, according to data released by the Reserve Bank of India (RBI) on February 9. This is the second consecutive week of increases, with reserves climbing $5.74 billion during the reporting period, the largest increase in nearly two months. The previous week saw a slight increase of $590 million.
Factors driving reserve growth
RBI intervention: The Reserve Bank of India actively intervenes in the foreign exchange market to reduce excessive volatility in the value of the rupee. This intervention plays an important role in influencing changes in foreign exchange reserves.
Asset Appreciation and Depreciation: Fluctuations in the value of foreign assets held within reserves also contribute to changes in foreign currency assets. These fluctuations can arise from the appreciation or depreciation of assets relative to the base currency.