India’s foreign exchange reserves increased by $394 million to $631.92 billion in the week that ended on March 4, not far away from its all-time high of $642.453 billion, according to the Reserve Bank data released on Friday.

During the reporting week that ended on March 4, the gain in the reserves was due to a rise in the foreign currency assets (FCA), a significant component of the overall reserves, showed the Reserve Bank of India’s (RBI) weekly data.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.

It touched a lifetime high of $642.453 billion in the week ended September 3, 2021.

The FCA increased by $634 million to $565.466 billion in the week ended March 4.

India’s over $600 billion in reserves should help it fight market volatility from the ongoing Russia-Ukraine crisis.

But analysts and traders had warned a slowing economy and an expanding fiscal deficit still makes it particularly vulnerable to capital flight, as reflected in decline in the previous week ending February 25 by $1.425 billion to $631.527 billion.

Asia’s third-largest economy has terrible memories of past attempts by the Federal Reserve to get away from crisis-mode policies, particularly in 2013 when mere talk of “tapering” stimulus prompted the rupee to sink to record lows.

Now, with the Fed again giving increasing thought to when it will need to reduce stimulus, India’s rupee is back under pressure, taking a U-turn and ending over 0.4% weaker At 76.61, after advancing a touch over 0.2 per cent to 76.27 in the opening trade on Friday.

The data also showed gold reserves declined by $147 million to $42.32 billion in the week ending March 4.

The special drawing rights (SDRs) with the International Monetary Fund (IMF) dipped by $59 million to $18.981 billion. The RBI said that the country’s reserve position with the IMF decreased by $34 million to $5.153 billion.