India's forex reserves rise by $816 million to scale 653.7 billion mark

India's foreign exchange reserves rose by $816 million to $653.71 billion in the week ended June 21, according to figures released by the RBI on Friday.

The country's forex reserves had contracted by $2.92 billion to $652.9 billion for the week ending on June 14 after rising steadily to a lifetime high in the preceding weeks. 

The latest figures show a resumption of the rising trend.Prior to this, India's foreign exchange reserves surged by $4.3 billion during the week ended June 7 to scale a life-time high of $655.8 billion.

An increase in the foreign exchange reserves reflects strong fundamentals of the economy and gives the RBI more headroom to stabilise the rupee when it turns volatile.

A strong forex kitty enables the RBI to intervene in the spot and forward currency markets by releasing more dollars to prevent the rupee from going into a free fall.

Conversely, a declining forex kitty leaves the RBI less space to intervene in the market to prop up the rupee.

"India's external sector remains resilient and overall, we remain confident of meeting our external financing requirements comfortably," Das said at a press conference after the monetary policy meeting earlier this month.

India's current account deficit declined to $23.2 billion (0.7 per cent of GDP) during 2023-24 from $67 billion (2 per cent of GDP) during the previous year due to a lower merchandise trade deficit, the RBI said on Monday.

Commerce Ministry data shows that India's exports of goods shot up over 9 per cent in May paving the way for a stronger balance of payments position.