Forex reserves record biggest weekly gain since 2021

This comes after the central bank injected $10 billion through a foreign-exchange swap auction on Feb. 28

India’s dollar stockpile had its biggest weekly gain in over three years, bolstered by the Reserve Bank of India’s currency swap operations last month.

Foreign exchange reserves grew by $15.3 billion to nearly $654 billion in the week to March 7, data released on Thursday showed. That is the highest weekly gain since Aug. 27, 2021, according to Bloomberg-compiled data.

This comes after the central bank injected $10 billion through a foreign-exchange swap auction on Feb. 28, stepping up efforts to ease a cash crunch in the financial system. The swap entails the central bank purchasing dollars from banks against the rupees they hold, while contracting to sell the greenback at a future date.

“The swap essentially adds to reserves and would imply a similar amount of draw-down when the swap matures,” said Sakshi Gupta, principal economist at HDFC Bank. “The reserves are also supported by valuation gains due to increase in gold prices,” she said.