According to the most recent data released by the RBI on Friday, India’s foreign exchange (Forex) reserves increased for the third consecutive week to reach a new lifetime high of $670.86 billion as of July 19. After rising by $14.9 billion over the previous two weeks, the reserves increased by $4 billion during the week.
Strong economic fundamentals are reflected in increased foreign exchange reserves, providing the RBI more leeway to stabilise the rupee when it becomes volatile. To prevent the rupee from plunging into free fall, the RBI can intervene in the spot and forward currency markets by releasing more dollars when the Forex kitty is strong.
On the other hand, a diminishing foreign exchange reserves less room for the RBI to intervene in the market to support the rupee. Recently, RBI Governor Shaktikanta Das expressed confidence that the country can easily meet its external financing needs, citing the resilience of India’s external sector.
German SMEs eye India: According to the German Press Agency (dpa), as the US loses favour as a business location, Germany’s small and medium-sized enterprises (SMEs) are increasingly looking to expand their supply chains to India.
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