The Reserve Bank of India's weekly ledger released this past Friday, revealed that the nation's foreign exchange kitty rose by $1.08 billion to reach $676.237 billion for the week ending July 17. The move was the second consecutive weekly increase after a week of $964 million had pushed the pile up to $675.157 billion earlier in the week, bringing India's reserves back on a positive trend after a few weeks of the year during which it trended negative more often than not.

Remove all the zeros from the total and the story becomes more interesting than the headline number. Reserves, the vast majority of which are foreign currency assets held in dollars, euros, pounds and yen, jumped by a much larger $4.549 billion to $551.057 billion. This single item did the bulk of the job. The total is pulled down by gold, as the RBI's gold stocks dropped $3.48 billion to $101.749 billion, which was not due to the central bank's sale of gold, but due to the international prices of gold having fallen. Traders hedged against a potential Federal Reserve rate-hike have forced bullion lower from the record price above $5,590 an ounce it reached late in January to about $4,050, whose latest decline was a quarter of the price. That sleeve swelled by a fraction of $44 million, thanks to an addition of Special Drawing Rights from the IMF, and India's reserve position at the Fund was almost unchanged.

The narrative is one of recovery, not of victory, and against a backdrop of the calendar year. The Indian reserves rose to a record high of $728.494 billion in the final week of February, and then steadily decreased through the spring and early summer as the RBI tapped into its dollar reserves to shore up the rupee as emerging-market currencies suffered a rough period. The difference, exceeding $50 billion, is a ballpark estimate of the central bank's firepower this year. Part of that is been restored from valuation gains and new additions, but the reserves are still far short of their peak.

It's because this week's data is so removed from the real situation with the rupee. Even in a week when the reserve number raised, the currency has been trading close to its weakest ever levels, around 96.5 to the dollar, and down close to 12 per cent in the last twelve months. What's the point of that split? Continued pressure on the currency is coinciding with the rising reserve count, which typically means a central bank has more breathing room. The rising level of forces behind the pressure on the currency so far has little to do with India's own fundamentals. It's past $100 a barrel for Brent crude, as attacks by the Houthis on tankers in the waters off the Saudi coast have brought back concerns about shipping through the Strait of Hormuz, through which a major portion of India's oil imports flow. For every dollar spent on imported crude, India's trade deficit will increase by nearly $40 and by almost $40 in demand for dollars. Add to that another conflict over trade from America, this time involving its tariffs on imports from about 60 economies, which are part of a forced-labour compliance push, and inflict a 10 percent duty on imports from India, on top of tariffs that had already been imposed earlier this year and were in some sectors already in the double digits. Exporters are taking the hit on their margins, state-run banks have been reportedly selling dollars in the name of the RBI to maintain the orderly slide and portfolio investors have been net sellers of Indian stocks for weeks.

That said, this week's addition to the reserves seems more like a policy virtue than a policy triumph, with the central bank making a discreet addition to its supplies that it will likely be forced to tap later. In the past, reserve levels in India were measured only in terms of the headline number, and not the number of months it could cover imports or the ratio of the reserves to the country's external debt; by these criteria, India is well positioned compared to its emerging-market peers, though nowhere near as close to China's reserve position as is China's, which continues to hold the largest stockpile of reserves in the world. It's also a reminder that from mid-May, the Narendra Modi government has been making a series of appeals to citizens to conserve foreign exchange by curbing overseas travel, reducing fuel usage and even limiting gold buying for a year to come calls unusual for a government in power.

This too, has a thread of its own that is global. Other central banks have continued to acquire gold despite the price correction, and China's monetary authority has been purchasing the yellow metal for a second consecutive month in June, while Poland and Uzbekistan are among the other key buyers this year, according to reserve managers, who say it is not a short-term trade for the banks but diversification from dollar-denominated assets. This week was not driven by the RBI selling gold; it was simply a valuation, meaning India's own gold reserves dipped this week for reasons other than a gold sale by the RBI. The rupee did not strengthen, the reserves strengthened and both statements are correct because they are being fuelled by two different forces one domestic and cumulative, the other external and, at least for now, beyond India's control.