India’s Forex Reserves Decline by USD 2.795 Billion to USD 616.143 Billion

India's Forex Reserves Decline by USD 2.795 Billion to USD 616.143 Billion

VoM News Desk | January 27, 2024 | 09:15 AM IST | Breaking News, India | Follow on Google News

India’s Forex Reserves Decline by USD 2.795 Billion to USD 616.143 Billion

India’s Forex Reserves Decline by USD 2.795 Billion to USD 616.143 Billion

India’s foreign exchange reserves witnessed a decline of USD 2.795 billion to reach USD 616.143 billion in the week ending January 19, 2023, according to the Reserve Bank of India’s latest data. The primary contributor to this decline was a reduction in foreign currency assets (FCA), the largest component of forex reserves, which fell by USD 2.653 billion to USD 545.855 billion during the week. Gold reserves also saw a decrease of USD 34 million, settling at USD 47.212 billion.

RBI’s 2023 Forex Operations and Overall Trend

In the calendar year 2023, the Reserve Bank of India (RBI) augmented its forex reserves by around USD 58 billion. This stands in contrast to 2022, where India’s forex reserves experienced a cumulative decline of USD 71 billion. The country’s forex reserves had reached an all-time high of about USD 645 billion in October 2021. The marginal decline since then can be attributed to various factors, including the rise in the cost of imported goods in 2022.

Factors Influencing Forex Reserves Fluctuations

The fluctuations in forex reserves may be linked to RBI interventions in the market to address uneven rupee depreciation against the strengthening US dollar. The central bank intervenes by selling dollars to prevent excessive volatility in the exchange rate. While the relative fall in forex reserves is marginal, the RBI closely monitors foreign exchange markets and intervenes as needed to maintain orderly conditions and prevent abrupt rupee depreciation.

Note: The RBI’s intervention aims to ensure market stability without adhering to predetermined target levels or bands for the exchange rate.

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