India's forex surges by $8.663 billion to reach all-time high of $725.727 billion

According to RBI data, the value of gold reserves, a key component of foreign exchange reserves, increased by $4.990 billion to $128.466 billion in the week ended February 13. 

New Delhi: India's foreign exchange reserves increased by $8.663 billion to an all-time high of $725.727 billion in the week ended February 13, according to data released by the Reserve Bank of India (RBI) on Friday. Foreign exchange reserves had declined by $6.711 billion in the previous week due to a fall in gold prices.

According to RBI data, the value of gold reserves, a key component of foreign exchange reserves, increased by $4.990 billion to $128.466 billion in the week ended February 13. Foreign Currency Assets (FCA), the largest component of foreign exchange reserves, increased by $3.550 billion to $573.603 billion. FCA includes the dollar, along with several other major global currencies such as the yen, euro, and pound, whose value is expressed in dollars.

According to the RBI, the value of SDRs increased by $103 million to $18.924 billion in the week ended February 13. Meanwhile, India's reserve position with the RBI increased by $19 million to $4.734 billion. Foreign exchange reserves are crucial for a country and provide a clear indication of its economic health. Furthermore, they play a significant role in maintaining a stable currency exchange rate.

For example, if the rupee is under significant pressure against the dollar and its value declines, the central bank can use its foreign exchange reserves to prevent the rupee from falling against the dollar and maintain a stable exchange rate.

Increasing foreign exchange reserves also indicates a significant inflow of dollars into the country, strengthening the country's economy. Furthermore, this increase also makes it easier for the country to trade abroad.