Foreign exchange reserves reach two-year high of $636.1 billion
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Mumbai (Uttam Hindu News): The country’s foreign exchange reserves rose by $10.47 billion to a two-year high of $636.1 billion in the week ended March 8. This is the biggest jump in foreign exchange reserves since the week ending July 14, 2023. According to the latest data released by the RBI on Friday, foreign exchange reserves had increased by $6.55 billion to $625.63 billion in the previous reporting week.
Rising foreign exchange reserves are positive for the economy as it reflects abundant supply of dollars which strengthens the rupee. Increasing foreign exchange reserves provide more scope for the RBI to stabilize the rupee if it becomes unstable.
RBI intervenes in the spot and futures currency markets by releasing more dollars to prevent the rupee from falling heavily. Conversely, a decline in foreign exchange reserves leaves less scope for the RBI to intervene in the market to support the rupee.
Good news on foreign exchange reserves also came on the day data was released showing the country’s exports reaching an 11-month high and trade deficit declining. This indicates strengthening of the country’s foreign trade balance which bodes well for the rupee going forward.
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