New Delhi: – The Indian Foreign Exchange (Forex) reserves have increased to cross the USD 500 billion mark. This takes India to the fifth spot in the list of countries with the highest forex reserves. The economists are looking at the increased forex reserves as an excellent sign. As per the economists, forex reserves have increased by USD 24 billion since March, and this will result in the strengthening of the Indian rupee, stopping its devaluation. Many experts are also looking at the Indian forex reserves crossing half a trillion USD as a historic moment.
The Reserve Bank of India (RBI) announced that the Indian forex reserves reached USD 501.70 in the week ended on 5th June. There was an addition of USD 8.22 billion in one week. In the week before that, which ended on 29th May, there was an addition of USD 3.44 billion to the forex, taking it to 493.48.
As per the information published by the RBI, the Foreign Currency Assets, which form a significant part of forex reserves, increased by USD 8.42 billion. At the same time, the valuation of the gold stock held by the RBI has reduced by USD 329 million to USD 32.352 billion.
Thirty years ago, in the 1990 decade, the Indian forex reserves had reached near zero and to continue with the financial transactions, India had to hypothecate its gold stocks with the United Kingdom. In March 1991, the RBI was left with only USD 5.8 billion, in the forex reserves. But now, India has reached the fifth spot in the list of countries with the highest forex reserves.
As per the International Monetary Fund, India has the highest forex reserves after China, Japan, Switzerland and Russia. India has surpassed Taiwan and Saudi on the list. There is a massive reduction in the forex reserves of Saudi and other oil-producing countries in the Gulf, in view of the slumped demand for crude oil due to the Coronavirus pandemic.
The commercial activities had come to a standstill because of the lockdown imposed because of the Coronavirus pandemic. Therefore, imports from other countries also have reduced. At the same time, incoming investments have increased. As per experts, this is the reason for the increase in the forex reserves. The economists are pointing out that foreign investments worth USD 2 billion have come into the country in the first week of June.