India's Forex reserves rise again, gold reserves up

Forex reserves rise $1.05 bn to $630.607 bn: RBI Forex reserves went up by $5.574 bn to $629.557 bn in the previous week. The forex reserves had touched an all-time high of $704.885 bn in September last year.

Gold reserves up by $1.242 bn to $70.893 bn. SDRs up by $29 mln to $17.889 bn.

Country’s reserve with IMF down by $14 mln to $4.141 bn.

RBI bought 8 tonnes of gold in November 2024 as central banks around the world continued to buy 53 tonnes of gold in the month, according to World Gold Council (WGC) report.

RBI is buying gold like other central banks as a safe-haven asset. The strategy of holding gold is to hedge against inflation and reduce foreign currency risks, especially in times of uncertainty triggered by geopolitical tensions.

RBI uses the forex reserves to control rupee volatility which happens when hot money from the stock market flows out when foreign investors sell shares.

Meanwhile, RBI has set up a 9-member Working Group to review trading and settlement timing of financial markets.

Over the last few years, there have been several developments including electronification of trading, availability of Forex and certain interest rate derivative markets on a 24X5 basis, increased participation of non-residents in domestic financial markets and availability of payment systems on a 24X7 basis.

The working group has representation from various stakeholders and will submit its report by April 30 this year.