India’s foreign exchange reserves rose for the third consecutive week, reaching their highest level since early June. According to the Reserve Bank of India’s statistical supplement, reserves stood at $599.53 billion for the week ended May 12, an increase of $3.55 billion from the previous week. This is attributed to the RBI’s intervention in the spot and forwards markets to prevent runaway moves in the rupee.
Despite the bullish outlook on the rupee from several foreign banks, the RBI’s intervention has caused the rupee to fall by 0.4% and 0.6% this week, its worst fall in two months. The local unit ended at 82.66 against the dollar on Friday.
The RBI’s intervention has been successful in shoring up reserves, however, it remains to be seen if the rupee will continue to remain strong in the coming weeks.