India’s foreign exchange reserves reach a two-year high of $636.1 billion

India’s foreign exchange reserves have hit a two-year high at $636.1 billion, with a significant surge of $10.47 billion for the week ended March 8, as per the latest data from the RBI. This marks the largest increase since July 2023, reflecting a positive trend for the economy.

The rise in foreign exchange reserves is crucial for strengthening the rupee and provides the RBI with more flexibility to stabilise the currency during volatile times. With ample dollar supply, the central bank can intervene in the currency markets to prevent any sharp depreciation of the rupee.

On the flip side, a decrease in forex reserves limits the RBI’s ability to support the rupee in case of a downturn. The current boost in reserves aligns with the positive news of India’s exports reaching an 11-month high and a decline in the trade deficit. These developments bode well for the country’s external balance and the rupee’s future stability.

Amidst the positive economic indicators, the increase in foreign exchange reserves signals a promising outlook for India’s currency and trade dynamics. The strengthening of the rupee and the country’s external balance are essential factors contributing to economic stability and growth in the coming months.