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MUMBAI - India’s foreign exchange reserves increased for the second consecutive week, reaching $630.6 billion as of January 31, according to the Reserve Bank of India (NSE:BOI) (RBI) Governor Sanjay Malhotra on Friday. The latest figures show a $1.1 billion rise in the reserves from the previous week, building on a $5.58 billion increase reported earlier.
The central bank’s intervention in the foreign exchange market, alongside the fluctuation in the value of foreign assets held, are primary factors influencing changes in the reserves. The RBI actively engages in managing the forex market to prevent excessive volatility of the Indian rupee.
During the week leading up to January 31, the rupee depreciated by 0.9% against the U.S. dollar, reaching a record low at that time of 86.6525 per dollar. This decline was attributed to portfolio outflows and uncertainties surrounding U.S. trade tariffs. Emerging market currencies like the rupee have faced downward pressure amid concerns that trade policies and sanctions initiated by U.S. President Donald Trump could negatively impact global trade and lead to increased inflation.
On Friday, the domestic currency was valued at 87.4750 against the dollar, marking a 1% drop on a week-on-week basis. India’s forex reserves are also bolstered by the country’s reserve tranche position in the International Monetary Fund.
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