Winning Bizness Desk
Mumbai. India’s foreign exchange reserves crossed the $700 billion mark for the first time, reaching an all-time high of $704.885 billion (about ₹59 lakh crore) as of September 27, 2024. This significant increase of $12.58 billion in just one week pushed the reserves past the previous record of $692.296 billion, achieved the week prior. With this development, India has become the fourth country globally to cross the $700 billion milestone, according to data released by the Reserve Bank of India (RBI). The largest component of India’s foreign exchange reserves is its Foreign Currency Assets (FCA), which stand at $616.154 billion. Additionally, the country holds a gold reserve of $65.796 billion. These reserves are now estimated to be sufficient to cover over a year’s worth of imports, further bolstering the country’s economic security.
Foreign Exchange Reserves Grew by $58 Billion in 2023
In 2023, India added approximately $58 billion to its foreign exchange reserves, a significant recovery after experiencing a $71 billion decline in 2022. This increase is seen as crucial in safeguarding the Indian economy from global economic shocks and maintaining financial stability. Foreign exchange reserves are vital assets held by a country’s central bank or monetary authority, such as the RBI in India. These reserves typically consist of currencies like the US dollar, euro, Japanese yen, and British pound. They serve as a financial buffer, protecting the economy from external risks like global currency fluctuations, trade imbalances, and financial crises.
No Change in RBI’s Repo Rate for the Ninth Consecutive Time
In related news, the Reserve Bank of India (RBI) maintained its stance on interest rates for the ninth consecutive time, keeping the repo rate steady at 6.5%. This decision ensures that loans will not become more expensive, and there will be no increase in Equated Monthly Installments (EMIs) for borrowers. RBI last increased the interest rate by 0.25% in February 2023, bringing it to the current level. RBI Governor Shaktikanta Das announced the decision after the Monetary Policy Committee (MPC) meeting, held from August 6, 2024. The MPC meets every two months to review and adjust monetary policy based on economic conditions, and this latest decision reflects RBI’s focus on maintaining price stability while supporting growth.
US Federal Reserve Cuts Interest Rate by 50 Basis Points
On the global front, the US Federal Reserve recently reduced its interest rate by 50 basis points, lowering it to a range of 4.75% to 5%. This marks the first rate cut since March 2020, following a series of 11 rate hikes between March 2022 and July 2023 aimed at controlling inflation. Despite the recent cut, the Federal Reserve had kept interest rates unchanged during its three previous policy meetings, including on July 26, 2023, when the rate remained between 5.25% and 5.5%.
