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The reserves rose to $501.70 billion in the reporting week, helped by a whopping rise in foreign currency assets (FCA), the latest data from the Reserve Bank of India showed.
This amount of foreign exchange reserves is equivalent to a year’s imports.
In the previous week ended May 29, the reserves had increased by $3.44 billion to $493.48 billion.
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Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Principal Economic Adviser in the Ministry of Finance Sanjeev Sanyal in a tweet said, “India’s foreign exchange reserves hit $ 501.7 billion. As I have been saying in recent weeks, demand suppression… would push the INR to appreciate after an initial capital outflow.”
“Now, as we open the economy to remove demand suppression, and push up credit growth, we will both revive imports and foreign capital inflows. The point is that demand identities imply macro-dynamics that is quite different from what naive forecasters suggest,” he said in a subsequent tweet.
According to a senior official of the finance ministry, foreign exchange reserves crossing $500 billion is a historic moment for the country.
“After March 2020, increase of about $24 billion is a sign of confidence in the Indian economy,” the official said.
India has been rewarded for its strong macroeconomic stability, the official added.
In the reporting week, the special drawing rights with the International Monetary Fund (IMF) rose $10 million to $1.44 billion.
The country’s reserve position with the IMF also rose $120 million to $4.28 billion during the reporting week, the data showed.