Sources of Variation in Foreign Exchange Reserves in India during April-June 2023

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Summary:

The Reserve Bank of India (RBI) has released the balance of payments (BoP) data for April-June 2023, revealing an increase in foreign exchange reserves during the period. The sources of this increase are broken down in Table 1, with the current account balance showing a decrease of $9.2 billion, while the capital account net showed an increase of $33.6 billion. The valuation change, primarily driven by the appreciation of the US dollar against major currencies, resulted in a loss of $7.8 billion. On a BoP basis, foreign exchange reserves increased by $24.4 billion, compared to an accretion of $4.6 billion in the corresponding period of the preceding year.