India's forex reserves rise to 6-week high amidst global banking crisis

As the Silicon Valley Bank collapse and a crisis that followed turned dollar into a safe haven for investors, Reserve Bank of India's forex reserves bulked up. Even as the Rupee weakened for the crisis-hit week that ended on March 17, the RBI's foreign exchange stack hit a six-week high.

A $12.8 billion addition, took the reserve to $572.8 billion, which is the highest level since early February, after a dip in the week before.

The breakdown

Currencies being the biggest component of the RBI's forex pile, reached $505.34 billion with an inflow of $10.49 billion.

Despite gold prices rising to record levels, the yellow metal increased its presence in the reserves by $2.19 billion to hit $44.11 billion.

The current forex reserves are still a lot lower than $633 billion at the start of 2023, with RBI trying to break the Rupee's fall and imported goods getting costlier.

The SVB impact

As the banking crisis worsened, the Rupee had also fallen by 0.6 per cent against the dollar, and has only gained after a 25 basis points hike in US Federal Reserve's interest rates.

The Rupee's rise as an international currency may also be accelerated once India inks agreements with UAE, Nigeria and Malaysia for bilateral trade.