RBI's reserves rise by $2.9 billion to $550.14 billion

The Reserve Bank of India's foreign exchange reserves went up by $2.9 billion to $550.14 billion in the week ending November 25, according to the latest central bank data.

The RBI's reserves have increased for the third consecutive week in a row.

The RBI's foreign currency assets went up by $3 billion to $487.29 billion last week, and the rise in reserves was due to an increase in foreign currency assets, according to the data.

The rupee was flat against the Indian currency in the week ended November 25, adding 1.7 per cent in the previous month.

The surge in the rupee was driven by anticipation of the slowing down of rate hikes after data showed a larger than expected decline in The index, which weakened around 5 per cent the previous month.

With the strength in the now having subsided, many economists believe that the RBI's reserves could see revaluation gains in the coming months, along with greater returns on its foreign reserves holdings due to higher global interest rates.

A large portion of the RBI's reserves is in the form of US government bonds.

The RBI's reserves were around $631 billion in late February when the Ukraine war broke out. The US Fed tightening cycle propelled global funds towards the dollar, which exerted pressure on emerging market currencies such as the rupee. The sold dollars from its reserves were intended to prevent excessive volatility in the exchange rate.

The reserves of $530 billion were equivalent to 8.6 months of imports projected for the current year, the had said earlier this month. The level of reserves in September 2021 accounted for almost 15 months of imports.