India’s forex reserves hit record USD729bn

MUMBAI: India’s foreign exchange reserves climbed to a record high of USD729.33 billion in the week to August 21, central bank data showed on Friday, boosted by persistent inflows from regulatory measures to boost the country’s balance of payments.

India’s FX pile has risen for eight straight weeks, jumping by about USD63 billion during this period and surpassing the previous peak hit in February.

In June, India unveiled a raft of measures to boost dollar inflows, including discounted hedging facilities for overseas borrowings by state-run firms and banks, and a free-of-cost hedging facility for banks to raise overseas FX deposits.

The Reserve Bank of India received nearly USD73 billion under these schemes between June 5 and August 21, including about USD65 billion from non-resident Indian deposits. The scale of inflows prompted the central bank to bring forward the closure of its deposit hedging facility by a month to August end.

“The rise in FX reserves is a combination of RBI buying dollars during that week and the rest is revaluation gain. The dollar purchase is led by FCNR-B swap window with banks pushing for deposits before the window closes,” said Gaura Sen Gupta, chief economist at IDFC First Bank.