Mumbai, Oct 10: India's foreign exchange reserves stood at $699.96 billion for the week ended Oct 3, data released by the RBI on Friday showed.

Foreign currency assets, a major component of the reserves, stood at $577.71 billion during the week. 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.

Although overall the foreign exchange reserves have declined from $700.24 billion in the previous week, the gold component of the forex kitty increased by over $3.75 billion to $98.77 billion for the week ended October 3.

Central banks worldwide have accumulated substantial amounts of gold as a safe-haven asset in their foreign exchange reserves amid uncertainty created by geopolitical tensions. The share of gold maintained by the Reserve Bank of India (RBI) as part of its foreign exchange reserves has almost doubled since 2021.

The RBI has added approximately 75 tonnes to its gold reserves since 2024, bringing its total holdings to 880 tonnes, which now constitute about 14 per cent of India’s total foreign exchange reserves, according to a Morgan Stanley report.

The special drawing rights component in the forex kitty stood at $18.81 billion, which is a $25 million increase over the previous week.

An increase in the country’s foreign exchange kitty gives the RBI more headroom to strengthen the rupee vis-a-vis the US dollar. Adequate forex reserves enable 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 and curbing its volatility.

India's foreign exchange reserves are sufficient to fund more than 11 months of goods imports and about 96 per cent of external debt outstanding, RBI Governor Sanjay Malhotra said recently.

Meanwhile, the RBI decided to ease foreign exchange management norms to facilitate easier payments by exporters, which include an extension in the time period for repatriation of forex earnings, to counter growing uncertainties in global trade.

The RBI has decided to extend the time period for repatriation, from one month to three months, in case of foreign currency accounts maintained in IFSC in India. This will encourage Indian exporters to open accounts with IFSC Banking Units and also increase forex liquidity in IFSC. The amendments to the regulations will be notified shortly, according to an official statement.

In January 2025, the RBI had permitted Indian exporters to open foreign currency accounts with a bank outside India for the realisation of export proceeds. Funds in these accounts can be used for making import payments or have to be repatriated by the end of next month from the date of receipt of the funds.

--IANS

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