India’s foreign exchange reserves grew for the second straight week, reaching a total of $630.6 billion as of January 31, according to a statement from Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday. This marks a $1.1 billion increase from the previous week, building on a $5.58 billion rise reported earlier.
The rise in reserves is largely attributed to the RBI’s active intervention in the foreign exchange market, as well as the fluctuations in the value of the foreign assets held by the central bank. The RBI’s involvement is aimed at managing the rupee’s volatility, particularly in times of external pressures.
During the week leading up to January 31, the Indian rupee depreciated by 0.9% against the U.S. dollar, reaching a record low of 86.6525 per dollar. This decline was largely driven by portfolio outflows and uncertainties surrounding U.S. trade tariffs. The rupee and other emerging market currencies have been under pressure due to concerns that the trade policies and sanctions initiated by U.S. President Donald Trump could have a negative impact on global trade, increasing inflation risks.
As of Friday, the rupee was valued at 87.4750 per dollar, marking a 1% drop on a week-on-week basis. India’s forex reserves are also supported by the country’s position in the International Monetary Fund (IMF), contributing to the stability of the country’s foreign exchange position.
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