India's forex reserves climb past $700 billion on robust inflows

According to Business Recorder, India's forex reserves climbed to $707 billion in the week ending August 7, a four-month high. The Reserve Bank of India, which released the figure on Friday, reported a weekly increase of $14.1 billion, its biggest since January. Most of that gain came from a $9.9 billion rise in the central bank's foreign currency assets.

The build-up has run for six weeks and added roughly $40 billion over that span. Policy steps unveiled in June to attract dollar inflows include discounted hedging for overseas loans taken by state-owned companies and banks, lower taxes on foreign holdings of government debt, and a no-cost hedge for banks raising overseas foreign currency deposits. Swap arrangements brought in more than $40 billion from June 8 through July 31, while overseas investors bought over $2.5 billion of Indian government bonds via the fully accessible route.

Gold holdings rose to $108,738 million from $104,743 million as of July 31, while SDR and reserve tranche values also edged up. Because changes in foreign currency assets are stated in dollars, movements in other reserve currencies feed into the figure. Analysts quoted in the report suggest that rupee support operations by the central bank have partly cancelled out the overseas dollar receipts.