With the rupee remaining under pressure over the last few weeks, the country's foreign exchange reserves declined for the third consecutive week.
With the rupee remaining under pressure over the last few weeks, the country’s foreign exchange reserves declined for the third consecutive week. Forex reserves as on January 15 fell by $1.726 billion from a week ago to $347.20 billion, according to data from the Reserve Bank of India.
In the week-ended January 15, the rupee depreciated 1.2% in value, which might have prompted a central bank intervention leading to the fall in forex reserves.
It is noteworthy that the rupee has been in a better position compared to some of its Asian peers in the light of the ongoing global turmoil. The Russian rouble fell to all-time lows to the dollar.
Foreign currency assets (FCAs), which form a key component of the reserves, fell by $1.723 billion from the week before to $324.67 billion as on January 15. FCAs are maintained in major currencies — US dollar, euro, pound sterling, and Japanese yen. However, the foreign exchange reserves are denominated and expressed in US dollar only.
The movements in the FCAs occur mainly on account of purchase and sale of foreign exchange by the RBI in the foreign exchange market in India, income arising out of the deployment of the foreign exchange reserves, external aid receipts of the government and revaluation of the assets.
Gold reserves, however, have remained flat at $17.24 billion. Special drawing rights (SDR) from the International Monetary Fund fell by $2.4 million to $3.997 billion. SDR is an international reserve asset created by IMF and allocated to its members in proportion of the members’ quota at IMF.
The country’s reserve position in the IMF stood at $1.295 billion, down $0.7 million from the previous week.
Over the last three weeks, forex reserves fell by a total of $4.8 billion, with the rupee having depreciated 2.13% in the same period. India’s forex reserves had touched a life-time high of $355.46 billion in the week-ended June 19.