Mumbai (Maharashtra) [India], January 19 (ANI): India’s foreign exchange reserves (Forex) continue to decline, extending their slump for the sixth consecutive week, standing at USD 625.87 billion as of January 10, according to the weekly data released by the Reserve Bank of India (RBI).
As of January 10, the country’s foreign exchange kitty declined by USD 8.72 billion to USD 625.871 billion, making its ten-month low, the latest data from the central bank showed.
The reserves had been falling ever since it touched an all-time high of USD 704.89 billion in September.
The reserves have been declining, likely due to RBI intervention aimed at aggressively preventing a sharp depreciation of the rupee. The Indian rupee is now at its all-time low against the US dollar, falling above the 86 mark against the US dollar.
The latest RBI data showed that India’s foreign currency assets (FCA), the largest component of forex reserves, stood at USD 536.011 billion.
Gold reserves currently amount to USD 67.883 billion, rising by USD 792 million, according to RBI data.
Despite a fall observed in recent months, the RBI in December assured that the forex reserves are sufficient to meet the more than 11 months of imports and about 96 per cent of external debt outstanding at the end of June 2024.
The RBI added in the bulletin that the country’s “foreign exchange reserves remained robust” as reflected in sustainable levels of reserve adequacy metrics.
In 2023, India added around USD 58 billion to its foreign exchange reserves, contrasting with a cumulative decline of USD 71 billion in 2022.
Foreign exchange reserves, or FX reserves, are assets held by a nation’s central bank or monetary authority, primarily in reserve currencies such as the US Dollar, with smaller portions in the Euro, Japanese Yen, and Pound Sterling.
The RBI closely monitors foreign exchange markets, intervening only to maintain orderly market conditions and curb excessive volatility in the rupee exchange rate, without adhering to any fixed target level or range.
The RBI often intervenes by managing liquidity, including selling dollars, to prevent steep rupee depreciation.
A decade ago, the Indian Rupee was among the most volatile currencies in Asia. Since then, it has become one of the most stable. The RBI has strategically bought dollars when the rupee is strong and sold when it weakens, enhancing the appeal of Indian assets to investors. (ANI)
