Led by foreign currency assets, forex reserves rise $8.6bn, hit high of $725.7bn

Mumbai: Foreign exchange reserves rose by $8.66 billion to a record $725.73 billion in the week ended Feb 13, reflecting valuation gains in gold and non-dollar foreign currency assets amid global market volatility and a softer US dollar.

Gold reserves rose by $4.99 billion to $128.47 billion following a surge in international gold prices. The increase in reserves followed a decline of $6.71 billion to $717.06 billion in the week ended Feb 6. The latest level surpassed the previous peak of $723.77 billion recorded in Jan.

Foreign currency assets increased by $3.55 billion to $573.60 billion. These assets are valued in US dollar terms and include holdings in currencies such as the euro, pound and yen. Special Drawing Rights increased by $0.10 billion to $18.92 billion. India's reserve position with the International Monetary Fund rose by $0.02 billion to $4.73 billion. TNN

Higher forex reserves aid Re stability
The increase reflects India's external buffer amid volatile global foreign exchange markets. The reserves provide around 12 months of import cover. Higher reserves support currency stability and enable market interventions to manage volatility.

A softer US dollar contributed to valuation gains in non-dollar assets. Appreciation in currencies such as the euro and a rise in gold prices supported the increase in reserves. Reserve levels remain sensitive to global currency movements and shifts in US economic conditions.

The increase in the reserves provides RBI the policy flexibility to manage both external shocks and domestic liquidity. Reserves had dipped to below $700 billion last year after heavy intervention by the RBI to defend the rupee in the wake of volatility described by market persons as "tariff tantrums". The reserve buffer supports external debt servicing and helps maintain investor confidence in India.