The precious week started well for India’s forex exchange reserves as it reached a new record. According to the Financial Express, the fx reserves of the country rose to USD 537.548 billion from USD 2.296 billion just in a week. This is the first time when India’s national forex exchange reserve has increased by $3.378 billion which is a surprise compared to last week’s data when a decline of USD 3.623 billion by the Reserve Bank of India (RBI) was reported.
There are some theories on why this particular thing happened. Experts discuss a few reasons for this sudden increase. First of all, the increase in exchange reserves was because of the jump in foreign currency assets (FCAs). The statistics of the Central Bank show that there was a big rise of FCAs this week ($2.618 to $494.168 billion which deserves to be mentioned as it plays a main part in the general reserves. But it’s not only the case. At first glance, the main reason for this increase indeed changes in FCAs but with a more in-depth analysis we can find out other reasons which are no less important.
The impact of the COVID-19 pandemic
The coronavirus pandemic made tons of changes to the world, challenging the economic sector of lots of countries and causing the economic crisis. The financial system of countries was seriously affected by Covid-19 and India is among those countries. During the pandemic, millions of people needed some side income. They have been looking for alternative ways to work remotely and survive the crisis. One good solution to this problem was FX trading. To make this big step and get involved in the FX trading industry, people needed to be provided with new opportunities to make money safely. Therefore, FX companies that weren’t sought after in the past started to feature no investment forex trading opportunities that would attract the majority of the Indian population. Several forex companies offered beginners to start trading without investing any money and there were a few ways on the internet for them to get information about this strategy and getting involved. Forex trading without a deposit became popular in India which is why it is likely that the growth in retail FX volumes in India helped make the surge happen even by a little bit.
New marketing strategies from FX companies
Another reason that is considered essential for this surge in India’s fx exchange reserves is the revamped marketing strategies from FX companies inside the country. India is a place of diverse cultures and an increasing economy. Forex trading there is an important part of the increasing economy. Foreign exchange companies often update their marketing strategies. One such company is FP market. Some say it is a good broker. However, check it out yourself and know – is fp market the best broker.
In the recent few years, the Indian forex market has experienced a period of rapid expansion. These changes are concerned using bonus systems and loyalty programs in India, offering social trading which involves sharing their strategies to newer traders. One of the most important things is employing digital marketing strategies because of which the fx market turned many visitors into investors. Despite new strict regulations and bans that affected online advertising of forex services, digital marketing is still integrated into today’s marketing strategies. This has a huge impact on the increase in the country’s forex exchange rates. Although the recent changes have made it difficult for fx brokers to expand their reach, new digital strategies suggest that the forex industry can remain competitive and make a profit throughout the year by reaching new potential investors meaning that a challenge of fx marketing in 2020 can be overcome.
Therefore, the recent surge in fx reserves can be caused by these above-mentioned reasons but it’s important to note that India’s forex reserves contain not only foreign currency assets but also it depends on gold reserves, special drawing rights (SDRs), and also, on the International Monetary Fund (IMF) of the nation. The FCAs include the effect of appreciation or devaluation of other country’s currencies except for the US. These units are the euro, pound, and yen. Recently the value in gold reserves of India decreased by USD 580 million to USD 37.44 billion.
However, an increase has been reported with the IMF and according to the Financial Express, the International Monetary Fund increased by $14 million to $5 billion.
Comments
