India’s foreign exchange reserves declined by USD 5.681 billion to USD 561.267 billion in the week ending on February 17This is their third consecutive week of decline in the overall forex reserves.
During the week that ended on February 3, the reserves declined from USD 8.319 billion to USD 566.948 billion. According to RBI’s latest data, India’s foreign currency assets, the biggest component of the forex reserves, declined USD 4.515 billion to USD 496.072 billion.
Gold reserves declined by USD 1.045 billion to USD 41.817 billion. At the start of the last year 2022, the overall forex reserves were at about USD 633 billion. Much of the decline can be attributed to RBI`s recent intervention and a rise in the cost of imported goods.
In October 2021, the country’s foreign exchange reserves reportedly touched an all-time high of about USD 645 billion. The forex reserves had been intermittently falling for months now largely because of the RBI’s intervention in the market to defend the depreciating rupee against a surging US dollar.
Typically, the RBI, from time to time, intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee. The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band.