Central banks have occasionally intervened in the spot and forward markets to protect the rupee, and traders have cited examples of state-owned banks buying dollars, presumably on behalf of the RBI.

India’s foreign exchange reserves rose to $572 billion this week through January 13, the highest level since early August last year, the Reserve Bank of India (RBI) statistics app said on Friday.

This is higher than the national reserve of $561.58 billion for the week ended Jan. 6 and higher than the two-year low of $524.52 billion set in October 2022.

To defend the rupee, traders probably cited the example of a state-owned bank buying dollars on behalf of the RBI.

In the past, central banks have indicated that changes in reserves are also linked to valuation gains and losses.

The rupee recorded its best trading week in two months in the week ending January 13th and continued to grow, albeit at a slower pace, this week ending January 20th.