India’s foreign exchange reserves dropped by slightly more than USD 2 billion in the week ending May 24, stepping back from their recent peak. The reserves currently stand at USD 646.673 billion.
In the preceding week, the reserves surged for the third consecutive week, increasing by USD 4.549 billion to reach USD 648.700 billion, as per data released by the Reserve Bank of India (RBI). This ascent marked a new record high for the reserves.
Before those three weeks, the foreign exchange reserves had experienced a decline for three consecutive weeks. As per the most recent data from the Reserve Bank of India (RBI), India’s foreign currency assets (FCA), which make up the largest part of the forex reserves, decreased by USD 1.510 billion to USD 567.499 billion.
During the week, the gold reserves decreased by $482 million, bringing the total to $56.713 billion. As per an RBI report, India’s foreign exchange reserves are now adequate to cover approximately 11 months of anticipated imports.
In the calendar year 2023, the Reserve Bank of India increased its foreign exchange reserves by approximately USD 58 billion. Conversely, in 2022, India’s forex reserves experienced a cumulative decline of USD 71 billion. So far in 2024, foreign exchange reserves have grown by about USD 28 billion cumulatively.
The relative decline in foreign exchange reserves could be associated with the Reserve Bank of India’s periodic market interventions to counteract the uneven depreciation of the rupee against a rising US dollar. Typically, the RBI manages liquidity in the market, including selling dollars, to prevent significant depreciation of the rupee.
Foreign exchange reserves, often referred to as forex reserves or FX reserves, are assets maintained by a country’s central bank or monetary authority. These reserves are typically held in major currencies, predominantly the US Dollar, followed by the Euro, Japanese Yen, and Pound Sterling.
The nation’s forex reserves reached their peak in October 2021. The subsequent decline is largely due to the increased cost of imported goods in 2022.
