Amid the Corona crisis, there have been persistent negative data on the country’s economy. A respite has been reported in this tough time. In fact, India’s foreign exchange reserves have grown by the record.
The latest Reserve Bank data shows that the country’s foreign exchange reserves grew by $3.43 billion in the week ended May 29. With this increase, the foreign exchange reserves have reached a record level of $493.48 billion (Rs 37 lakh crore). RBI offers foreign exchange reserves data on a weekly basis. Is considered a symbol of the strength of the country’s economy.
What does it mean?
This increase means that there is no dearth of foreign exchange reserves for trading transactions in the exchequer. In fact, foreign exchange reserves are funds or other assets held by the central bank of any country to pay its liabilities if required. These reserves are placed in one or more currencies. Usually, reserves are kept in dollars or euros.
Why reserves increased even in corona crisis
The growth comes at a time when the country’s economy is looking at a year’s impact due to corona and lockdown. But the question is why this increase has happened even after the Corona crisis. Before understanding this, it is important to know that the international market has seen a steep fall in crude oil prices during May. In addition, the demand for fuel has also been low due to the lockdown.
This means that there is cheaper and less procurement of crude oil. Because of this, the government has to pay less dollars. Obviously, the low dollar payment has resulted in savings and an increase in foreign exchange reserves. The growth has been going on for the past few weeks, but this time the increase is at a record level.
Gracia is a senior writer at Get Ignite, where she covers media and advertising and co-hosts the Original Content podcast. Previously, she worked as a tech writer at Adweek, a senior editor at the tech blog VentureBeat, and a local government reporter at the Hollister Free Lance. She attended Stanford University and now lives in Brooklyn.