India’s forex kitty surges to new lifetime high of $655.8 billion

Mumbai: India’s foreign exchange reserves surged by $4.3 billion during the week ended June 7 to scale a lifetime high of $655.8 billion, according to the latest data released by the RBI on Friday.

The country’s forex kitty has broken the earlier record of $651.5 billion, as of May 31, that was announced by RBI Governor Shaktikanta Das on June 7, and has been rising steadily in recent weeks.

The surge in foreign exchange reserves also came on a day when Commerce Ministry data show that India’s exports of goods shot up over 9 per cent in May.

“India’s external sector remains resilient and overall, we remain confident of meeting our external financing requirements comfortably,” Das said at a press conference after the monetary policy meeting last week.

India, with an expected 15.2 per cent share in world remittances in 2024, also continues to be the largest recipient of remittances globally. Overall, the current account deficit for 2024-25 is expected to remain well within its sustainable level, he added.

An increase in the foreign exchange reserves reflects strong fundamentals of the economy and gives the RBI more headroom to stabilise the rupee when it turns volatile.

A strong forex kitty enables the RBI to intervene in the spot and forward currency markets by releasing more dollars to prevent the rupee from going into a free fall.

Conversely, a declining forex kitty leaves the RBI less space to intervene in the market to prop up the rupee.