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India's foreign exchange reserves hit a new high of $327.88 billion in the week ended January 30, according to data published by the Reserve Bank of India on Friday. This was a surge of $5.8 billion from the earlier week's tally of $322 billion.
The previous record high was $322.13 billion recorded for the week ended January 16. The surging reserves come as foreign investors have continued to be hefty buyers of bonds and shares because of expectations for economic reforms from Prime Minister Narendra Modi's government and the central bank's success in reducing inflation.
Foreign institutional investors poured in a $26.4 billion into Indian bonds and another $16 billion into shares in 2014.
The RBI has also been keen to build up its defences after the country suffered in 2013 the worst rupee turmoil since a balance of payment crisis a decade ago because of dwindling reserves and a high current account deficit.
The rupee is among the best performing Asian currencies so far this year, with a gain of around 2 per cent against the dollar, supported by capital inflows and expectations the Reserve Bank of India will ease policy to encourage growth.
At the February 3 monetary policy review, RBI Governor Raghuram Rajan said the central bank is not targeting a particular value of rupee. He said that the RBI has intervened in the foreign exchange market to protect rupee's volatility.
Dr Rajan also pointed out to the improving current account deficit numbers of the country. He said that the current account deficit of this fiscal is likely to fall to 1.3 per cent of GDP and could go even lower in the next fiscal. India's current account deficit has narrowed from a record high of 4.8 per cent of GDP in the 2012/13 fiscal year as the government has imposed stringent curbs on gold imports.
A breakdown of forex reserves showed that for the week ended January 30, foreign currency assets (FCA) rose by $5.814 billion to $303.32 billion. Foreign currency assets (FCA), expressed in dollar terms, include the effect of appreciation and depreciation of non-US currencies such as euro, pound and yen held in reserves. The country's gold reserves remained unchanged at $19.377 billion.
The previous record high was $322.13 billion recorded for the week ended January 16. The surging reserves come as foreign investors have continued to be hefty buyers of bonds and shares because of expectations for economic reforms from Prime Minister Narendra Modi's government and the central bank's success in reducing inflation.
Foreign institutional investors poured in a $26.4 billion into Indian bonds and another $16 billion into shares in 2014.
The RBI has also been keen to build up its defences after the country suffered in 2013 the worst rupee turmoil since a balance of payment crisis a decade ago because of dwindling reserves and a high current account deficit.
The rupee is among the best performing Asian currencies so far this year, with a gain of around 2 per cent against the dollar, supported by capital inflows and expectations the Reserve Bank of India will ease policy to encourage growth.
At the February 3 monetary policy review, RBI Governor Raghuram Rajan said the central bank is not targeting a particular value of rupee. He said that the RBI has intervened in the foreign exchange market to protect rupee's volatility.
Dr Rajan also pointed out to the improving current account deficit numbers of the country. He said that the current account deficit of this fiscal is likely to fall to 1.3 per cent of GDP and could go even lower in the next fiscal. India's current account deficit has narrowed from a record high of 4.8 per cent of GDP in the 2012/13 fiscal year as the government has imposed stringent curbs on gold imports.
A breakdown of forex reserves showed that for the week ended January 30, foreign currency assets (FCA) rose by $5.814 billion to $303.32 billion. Foreign currency assets (FCA), expressed in dollar terms, include the effect of appreciation and depreciation of non-US currencies such as euro, pound and yen held in reserves. The country's gold reserves remained unchanged at $19.377 billion.
