India’s forex reserves decline $2.36 billion to $583.5 billion: RBI Data

India’s foreign exchange (forex) reserves declined by $2.36 billion to $583.53 billion during the week ended October 20, according to data by the Reserve Bank of India (RBI).

In the previous reporting week, the overall reserves had increased by USD 1.153 billion to USD 585.895 billion.

In October 2021, the country’s forex kitty reached an all-time high of USD 645 billion. The reserves took a hit as the central bank deployed the reserves to defend the rupee amid pressures caused majorly by global developments since last year.

For the week ended October 20, the foreign currency assets, a major component of the reserves, decreased by USD 4.15 billion to USD 515.2 billion, according to the Weekly Statistical Supplement released by the RBI.

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.

Gold reserves were up by USD 1.85 billion to USD 45.42 billion during the week, the RBI said.

The Special Drawing Rights (SDRs) were down by USD 70 million to USD 17.93 billion, the apex bank said.

India’s reserve position with the IMF increased by USD 6 million to USD 4.98 billion in the reporting week, the apex bank data showed.

Reserves have dropped sharply in recent weeks, down by $14.2 billion in five weeks to Oct. 6, a five-month low. However, they rose by $1.16 billion in the week to Oct. 13.

The RBI intervenes in both the spot and forwards markets to prevent runaway moves in the rupee.

“We do not have a specific exchange rate in mind with regard to our currency market intervention,” RBI Governor Shaktikanta Das reiterated in a recent session with Krishna Srinivasan, Director, Asia and Pacific Department at the International Monetary Fund.

“Our approach and our focus, our emphasis is to prevent excessive volatility of the exchange rate,” he added.

Das also called on the United States and other countries and organisations to review their use of “labelling like watch lists”.

Changes in foreign currency assets are caused by the RBI’s intervention as well as the appreciation or depreciation of foreign assets held in the reserves.

Foreign exchange reserves also include India’s reserve tranche position in the IMF.

The rupee traded in a 83.0375-83.2850 range in the week ending Oct. 20. On Friday, the currency settled at 83.2450.