India's foreign exchange reserves swelled to a new record of $651.5 billion for the week ended May 31, the Reserve Bank of India data showed on Friday. The forex kitty jumped nearly $4.8 billion over the previous reporting week.
Since October 2021, forex reserves have taken a hit as the central bank deployed dollars to defend the rupee amid pressure caused primarily by global developments. The forex stock hit a low of $524.5 billion in October 2022.
So far this year, foreign portfolio investors have pumped in Rs 37,694 crore into the country's debt and equity markets, according to data from the National Securities Depository Ltd.
More robust greenback inflows in the dollar-rupee spot market are expected ahead of India's inclusion in JPMorgan's Government Bond Index-Emerging Markets.
For the week-ended May 31, foreign currency assets—a major component of the reserves—increased by $5 billion to $572.5 billion, the RBI data showed.
In dollar terms, the foreign currency assets include the effect of the appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Gold reserves declined by $212 million to $56 billion during the week.
Last month, RBI Governor Shaktikanta Das said the central bank is focused on building robust buffers of foreign currency reserves through its intervention in the dollar-rupee currency market.
"It's our prime focus to build up a strong umbrella in the form of substantial quantum of forex reserves, which will help us when the cycle turns or when it rains heavily," Das said.
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