The Reserve Bank of India (RBI), on Friday, revealed that India’s forex reserves has declined by $2.79 billion, settling at $616.14 billion for the week ending on January 19. In the preceding week, the reserves had experienced an increase of $1.6 billion, reaching $618.94 billion by the conclusion of the week ending on January 12, 2024.
As per the Weekly Statistical Supplement published by the Reserve Bank of India (RBI), Foreign Currency Assets (FCAs) experienced a decline of $2.6 billion, settling at $545.8 billion.
When denominated in dollars, FCAs account for the impact of the appreciation or depreciation of non-US currencies, such as the euro, pound, and yen, held within the foreign exchange reserves.
Gold reserves also saw a decrease, dropping by $34 million to reach $47.2 billion. Additionally, Special Drawing Rights (SDRs) declined by $476 million, reaching a total of $18.2 billion.
The reserve position in the International Monetary Fund (IMF) saw a decrease of $18 million, settling at $4.85 billion.
It is noteworthy that in October 2021, the country’s foreign exchange reserves had reached an unprecedented peak of $645 billion. The decline in reserves is attributed to the central bank’s strategic use of the reserves to safeguard the rupee amidst challenges primarily stemming from global developments.
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Traditionally, the Reserve Bank of India (RBI) intervenes in the market through liquidity management, which includes the sale of dollars, aiming to prevent a sharp depreciation of the rupee.
The RBI actively monitors foreign exchange markets, intervening judiciously to uphold orderly market conditions and mitigate excessive volatility in exchange rates, without adhering to any pre-determined target level or band.
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