Mumbai, Nov 8 || India's foreign exchange reserves fell by $2.6 billion to $682.13 billion as of November 1, data released by the Reserve Bank of India (RBI) showed on Friday.
However, gold reserves, which form part of the foreign exchange kitty, increased by $1.2 billion to $69.8 billion during the week, according to the central bank.
There has been a surge in gold buying amid geo-political tensions. According to industry experts, gold is now acting as a hedge against US economic sanctions too, traditionally being a safe haven asset and as a hedge against inflation. Despite inflation being moderated, gold has rallied to new highs. The share of gold in the country's forex reserves has also surged more than 210 per cent since 2018.
India’s foreign exchange reserves had soared to an all-time high of $704.885 billion at the end of September taking the country to the 4th position globally after China, Japan, and Switzerland in the size of its forex kitty. The country’s forex reserves have overall gone up by $34.5 billion in the current financial year which is sufficient to cover imports for 11.2 months based on the balance of payments, according to the RBI. This reflects the strong macroeconomic fundamentals of the economy.