MUMBAI: India's foreign exchange reserves rose by $2.816 billion to hit a four-month high of $606.859 billion during the week ended December 8, according to RBI data released on Friday.

The increase comes on the back of a $6.107 billion jump in the preceding week to $604.042 billion. This was the highest gain since the week concluding on July 14.

An increase in the foreign exchange reserves is good news as it helps the RBI to stabilise the rupee.

The RBI intervenes in the spot and forward currency markets by releasing more dollars to prevent the rupee from going into a free fall when it comes under pressure.

Any sharp decline in the country's forex kitty leaves the RBI less headroom to intervene in the market when the rupee falls.