As of July 14, India's foreign exchange reserves reached $609.02 billion, the greatest level in nearly 15 months, according to data released by the central bank on Friday.
They increased by $12.74 billion from the previous week, the largest increase in four months, after increasing by a total of $3.08 billion in the two previous weeks.
"A major portion of the week-on-week jump in forex reserves is driven by revaluation gains due to dollar weakness and reduction in US Treasury yields," said Gaura Sen Gupta, India economist at IDFC FIRST Bank.
The dollar-denominated adjustments in foreign currency assets reflect the appreciation or depreciation of other currencies held in Reserve Bank of India (RBI) reserves.
Sen Gupta stated that the remainder of the gain is due to the RBI's purchases of foreign currency on the spot foreign exchange markets and that the central bank will maintain a tight range for the rupee this year.
According to data from the National Securities Depository Limited, foreign investors have net-purchased $16 billion in Indian equities over the past three months, allowing the central bank to purchase from the market and build reserves.
According to calculations by Reuters, the current level of foreign exchange reserves and the RBI's forward foreign exchange account of $19.3 billion are sufficient to cover imports for over 11 months.
In the week covered by the data on foreign exchange reserves, the rupee had its greatest performance in four weeks. It had traded between 81.9300 and 82.6550 during the previous week.
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