forex reserves: India’s forex reserves see biggest weekly fall in over 6 months

India’s forex reserves declined to a near two-month low and was the biggest weekly fall in over six months for the week ending August 18, latest data by the Reserve Bank of India (RBI) showed on Friday. Forex reserves for the week mentioned dipped by $7.28 billion to $594.90 billion.

For the week ending August 11, India’s forex reserves went up by $708 million and stood at $602.161 billion.

According to the Weekly Statistical Supplement released by the RBI, Foreign currency assets (FCAs) also fell by $6,613 million to around $527.786 billion.

Apart from this, gold reserves for the week dipped by $515 million to $43.824 billion while SDRs were down by $119 million to $18.205 billion, revealed data by RBI.

India’s reserve position in the IMF also dropped by $51 million to $50.72 billion.

It can be noted that in October 2021, the country’s forex kitty had reached an all-time high of USD 645 billion. The reserves have been declining as the central bank deploys the kitty to defend the rupee amid pressures caused majorly by global developments.

Typically, the RBI, from time to time, intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.

The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band.