As per RBI data, the foreign exchange reserves of India increased by 3.6 billion dollars in the week that ended on March 15. The forex reserves of the country crossed 405 billion dollars to reach at 405.03 billion dollars from 402.3 billion dollars at end of the first week of March. Foreign Currency Assets (FCAs) which form the largest component of foreign exchange reserves reached to 377.77 billion dollars from 374.227 billion dollars in the previous week. The FCAs are maintained in major global currencies like US dollar, Euro and Pound Sterling. The gold reserves rose by 38.9 million dollars reaching a totoal monetary value of 23.4 billion dollars.

The foreign exchange added by India in one week (3.6 billion dollars) is more than one third of the total reserves of Pakistan (8.84 billion dollars). This means the investment received by India in one month is more than the total reserves of Pakistan. Earlier the forex of Pakistan touched 7 billion dollar which is less than double of what India adds in one week. The total foreign exchange reserve of India is almost 50 times more than that of Pakistan. However the situation improved little after help from the UAE, Saudi Arabia and China. India has more gold reserves than total foreign exchange reserves of Pakistan. The country has gold reserves that are three times more than the total reserves of Pakistan.

The foreign exchange is growing due to an exponential increase in investment made by Foreign Institutional Investors (FIIs). The gap between exports and imports narrowed in the last few months, this is also one of the major reasons behind the rise in forex levels. As per the stock exchange data, net foreign portfolio investment in the country reached a 15 month high of 2.42 billion dollars in February. Nifty, the benchmark index of the National Stock Exchange, rose by 11 percent since October 26. The foreign investors are returning to India due to stable macroeconomic conditions and the prospect of the Modi government coming back to power with a majority. The India Air Force’s strike deep inside the territory of Pakistan for the first time country’s history has raised the investor’s sentiment on Modi government getting reelected in upcoming general elections.

The trade deficit narrowed to 17 month low in February with exports rising 2.44 percent to 26.67 billion dollars compared to the same month in last year. Imports dipped by 5.41 percent to 36.26 billion dollars given the low gold imports and softening of crude prices in international markets. Gold imports fell by 10.81 percent to 2.58 billion dollars in February compared to 2.90 billion dollars in the same month in the previous year.

The rise in exports, currency, and foreign institutional investors is very encouraging given the emerging markets across Asia are slowing down due to China’s woes. The imports and exports of China fell by double digits due to economic slowdown and trade war.India had forex reserves of $600 million in 1991 which were barely enough to cover three weeks of imports. We have come a long way from there and forex reserves have gone up by more 600 times since then.