India's Forex Reserves Experience a Notable Decrease

NEW DELHI: In a recent development, India's foreign exchange reserves have witnessed a substantial decline of $8.478 billion, settling at $644.391 billion for the week ending on December 20. This information was released by the Reserve Bank of India (RBI) on Friday, marking a continued downward trend from the previous week's $1.988 billion drop, which had brought reserves to a six-month low of $652.869 billion, according to news agency PTI.

Understanding the Decline

The recent weeks have shown a consistent decline in reserves, primarily attributed to revaluation and RBI's interventions in the forex market aimed at stabilizing rupee fluctuations. The reserves had previously reached their peak at $704.885 billion at the end of September.

Breaking Down the Components

During the period ending December 20, the foreign currency assets, which form a significant part of the reserves, saw a reduction of $6.014 billion, settling at $556.562 billion. These assets, when expressed in dollar terms, include the impact of value changes in non-US currencies such as the euro, pound, and yen that are held within the foreign exchange reserves.

RBI also reported that Special Drawing Rights (SDRs) decreased by $112 million to $17.885 billion. Similarly, gold reserves experienced a reduction of $2.33 billion, settling at $65.726 billion. Additionally, India's reserve position with the IMF declined by $23 million, reaching $4.217 billion in the reporting week.

Looking Ahead

As India navigates through these challenging times, the focus remains on the strategies that the RBI will employ to manage the forex reserves and stabilize the rupee against global currencies.