By Admin 
India Forex Reserve: India’s foreign exchange reserves increased by $ 3.293 billion to reach $ 696.610 billion in the week ending December 26. This was revealed in RBI data on Friday. Whereas last week there was an increase of 4.368 billion dollars in foreign exchange reserves, due to which it reached 693.318 billion dollars.
FCA and gold reserve also increased
According to Reserve Bank data, in the week ending December 26, the value of Foreign Currency Assets (FCA), the largest part of foreign exchange reserves, also increased, which increased by $ 184 million to $ 559.612 billion. FCA, expressed in dollar terms, includes the impact of movements in the value of the euro, pound and yen in non-US units held in foreign exchange reserves.
Gold reserves also increased
This week there has also been a jump in the gold reserve, which increased by $ 2.956 billion to $ 113.32 billion. Due to this increase in gold reserves, there has been a sharp rise in gold prices at the international level. At present, gold is trading around $ 4400 per ounce in the international markets.
RBI said that during this period, Special Drawing Rights (SDRs) also increased by $ 60 million to $ 18.803 billion. With this, India’s reserve position with the IMF increased by $93 million to $4.875 billion in the week under review.
Why are foreign exchange reserves necessary?
For a country, its foreign exchange reserves are its backbone. This reveals the economic condition of the country. Whether it is about making payment for imported goods or paying interest on loans taken from abroad, it is needed. Central banks such as the RBI in India use foreign exchange reserves to stabilize the value of domestic currencies or to prevent them from falling. Foreign exchange reserves increase the confidence of foreign investors, which encourages investment in different sectors of the country.
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