The Indian rupee closed on a stronger note against the US dollar up 4 paise against the global benchmark currency. The Reserve Bank of India's gold reserves have also surged by 40 per cent in the past five years.
A stable rupee bringing down the need for RBI to spend foreign currencies, and its appetite for gold, have helped India's falling foreign exchange reserves bounce back after two weeks.
Reserves rise as Rupee gains strength
The forex reserves snapped a two-week losing streak to rise by $5.929 billion in the week that ended on June 2, 2023.
With this the foreign exchange reserves bulked up to $595.067 after hitting the lowest levels in a month in the week that ended on May 26, 2023.
The rise was largely driven by foreign currency assets, which went up by $5.270 billion, and continue to account for the lion's share of the reserves.
Gold was also shining bright as the precious metal's value in the forex kitty went up by $655 million, at a time when it is a hedge against recession and global headwinds.
After a major decline in forex reserves caused by the rising cost of imports, they are still a long away from the all time high of $645 billion achieved in October 2021.