MUMBAI: Reliance Jio’s multi-billion-dollar fundraise, a foreign trade surplus and a surge in gold value are helping to boost the country’s foreign exchange reserves. The week ended July 10, saw forex reserves rise by $3.1 billion to a record $516 billion.
According to bankers, the reserves are moving up on account of the continued dollar purchases by the Reserve of India (RBI). Last month the country’s reserves hit the half a trillion mark for the first time to $501billion. In little over a month, the RBI has added another $15 billion.
In addition to the forex inflows due to Reliance Industries fundraising, dollar supplies have also been boosted by a trade surplus in June – the first in 18 years.
“This (trade surplus) could be reflective of weak domestic demand, relative to global demand; the weakness in imports was spread across investment and consumption goods. India is likely to post a strong current account surplus in 1Q (FY21), which along with strong FDI inflows and stabilization in FII outflows, has helped the RBI shore up record FX reserves,” said Pranjul Bhandari, an economist at HSBC in a note.
Forex reserves comprise of foreign currency assets, gold and drawing rights with multilateral institutions. In the week ended June 10, the reserves were up due to a $2.3 increase in foreign currency assets. Also, the increase in the value of gold pushed up gold reserves in dollar terms by $712 million to $34.72 billion.