India’s foreign exchange reserves jumped by $5.7 billion to $622.5 billion for the week ended Feb 2, RBI data released on Feb 9 showed. 

In the previous week, the overall reserves had increased by $591 million to $616.7 billion.

Rising foreign exchange reserves are a positive for the economy as they help strengthen the rupee. An increase in foreign exchange reserves props up the marcoeconomic fundamentals and helps the RBI stabilise the rupee when it turns volatile.

The RBI intervenes in the spot and forward currency markets by releasing more dollars to prevent the rupee from going into a free fall when it comes under pressure.

A sharp decline in the country’s forex kitty leaves the RBI less headroom to intervene in the market to stabilise the rupee.

(Source: IANS)

-Edited for style

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