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Anand Rathi Report
After a fall in the previous week, India’s foreign exchange reserves at 538 billion dollar on August 21, 2020 recorded a week-over-week increase of 2.3 billion dollar.
India has added considerably to its foreign exchange reserves in recent periods.
For the month-till-date, addition has been 3 billion dollar; in 2020 so far India has added 76 billion dollar and over the last 12 months, the addition has been almost 110 billion dollar. The major part of forex addition has been since April 2020.
The sharp rise in India’s forex accumulation is a result of both a valuation gain and the Reserve Bank of India’s forex intervention.
For example, the marked-to-market gain on gold alone since late March 2020 has been over 9 billion dollar.
Similarly, the fall in yield on U.S. treasury bills has led to gains in foreign currency reserves.
Yet, it appears that the RBI has considerably intervened in the forex market to avoid a major appreciation of the rupee since April 2020.
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