India's Forex Reserves Experience a Significant Decline

India's foreign exchange reserves have seen a continuous decline for the sixth consecutive week, reaching a ten-month low of $625.87 billion as of January 10, according to the Reserve Bank of India (RBI). This represents a decrease of $8.72 billion from the previous week, marking a notable slump from the all-time high of $704.89 billion recorded in September.

RBI's Intervention to Stabilize the Rupee

The decline in reserves is largely attributed to the RBI's efforts to mitigate the sharp depreciation of the Indian rupee, which has weakened beyond the 86 mark against the US dollar, setting a new record low. Despite these challenges, the RBI has reassured that the reserves remain robust, sufficient to cover more than 11 months of imports and 96% of the external debt outstanding as of June 2024.

Gold Reserves See an Increase

Amidst the fluctuations in foreign currency assets, which stand at $536.01 billion, gold reserves have experienced a rise of $792 million, reaching $67.88 billion. This indicates a strategic diversification in India's reserve management.

Looking Ahead

The RBI continues to vigilantly monitor the foreign exchange markets, intervening as necessary to ensure orderly market conditions and curb excessive volatility in the rupee's exchange rate. Over the past decade, the rupee has evolved from one of Asia's most volatile currencies to one of its most stable, enhancing the attractiveness of Indian assets to global investors.