India’s Forex Reserves jump to 695.1 billion dollar, marking second consecutive weekly gain

India’s foreign exchange reserves increased by $1.48 billion to $695.10 billion for the week ended August 15. Foreign currency assets, the largest component, rose by $1.92 billion. In contrast, the value of gold reserves declined by $493 million due to fluctuations in international prices.

New Delhi: India's foreign exchange reserves, which are an important indicator of the country's economic strength, have once again increased. In the week ended August 15, it reached a new level of $695.10 billion with an increase of US $1.48 billion. This increase is important because just a week before this, a significant increase of $4.74 billion was recorded in the reserves, which reached $693.61 billion. In this way, a positive trend is being seen in the reserves for two consecutive weeks.

The biggest contribution to this foreign exchange reserve is from Foreign Currency Assets (FCA), which has increased by $1.92 billion to $585.90 billion this time. It is important to note that the value of these assets is directly affected by the fluctuations in the US dollar against other major international currencies such as the euro, British pound, and Japanese yen. When the dollar weakens against these currencies, the value of these assets increases, and in the opposite case, it can also decrease.

However, this week the value of gold reserves fell by $493 million and remained at $85.66 billion. This decline is due to fluctuations in gold prices in the international market. On the other hand, the Special Drawing Rights (SDR) with the International Monetary Fund (IMF) increased by $41 million to $18.78 billion. Also, India's reserve position with the IMF also increased marginally by $15 million to $4.75 billion.

The economic condition of neighboring country Pakistan has also been mentioned in this news. There has also been a slight improvement in the foreign exchange reserves there. The holdings of the Central Bank of Pakistan have increased by $13 million to $14.256 billion. At the same time, commercial banks hold about $5.315 billion in foreign currency, taking the country's total foreign exchange reserves to $19.571 billion.

According to reports, this amount is enough to cover about 2.32 months of Pakistan's imports, which is considered a worrying level because reserves covering at least 6-7 months of imports are usually considered safe. Finally, foreign exchange reserves refer to the collection of all foreign currencies and assets that a country's central bank holds.

It has several important purposes: keeping the exchange rate of a local currency such as the rupee stable, ensuring payments for international trade, and acting as a safety net for the country in case of any economic crisis or balance of payments deficit. Strong foreign exchange reserves boost investor confidence and symbolize the strength of the country's economy.