India’s foreign exchange (Forex) reserves jumped by $2.03 billion to $277.38 billion for the week ended September 20, the biggest weekly gain in nearly two years, on the back of concessional swap facilities offered to banks by the Reserve Bank of India (RBI).

The Forex reserve has increased sharply for the second consecutive week. It had jumped by $544.7 million in the previous week.

According to RBI’s Weekly Statistical Supplement, the country’s foreign currency assets, the biggest component of the Forex reserves, increased by $1.97 billion to $249.22 billion for the week ended Sep 20.

The foreign currency assets, expressed in the US dollar term, include the effect of appreciation or depreciation of non-U.S. currencies held in reserve, such as the pound sterling, euro and yen.

Analysts say the concessional swap facilities offered by the RBI to banks was the main reason for such a sharp increase in the Forex reserve. The RBI had announced the concessional swap facilities Sep. 4, with a view to support the battered rupee.

Under the new facilities, commercial banks can swap dollars raised through foreign currency non-resident deposits and overseas Forex loans with RBI at a discount to the market swap rate.

The special drawing rights (SDRs) increased by $38.3 million to $4.42 billion, while reserves with the International Monetary Fund (IMF) rose by $17.4 million to $2.01 billion.

The value of India’s gold reserves remained unchanged at $21.72 billion during the week under review.

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