India’s foreign exchange (forex) reserves hit a low for the eighth consecutive week of USD 656.582 billion in a week till November 22 according to the Reserve Bank of India (RBI). The forex reserve declined by approx USD 1.31 billion in the week ended on November 22, the reserves are in a declining phase after touching an all time high of USD 704.89 billion in September.
The major reason attributed to the decline is the RBI’s intervention to prevent the rupee depreciation as a substantial foreign exchange reserve buffer helps shield domestic economic activity from global events.
According to the latest RBI data India’s foreign currency assets (FCA), the largest component of forex reserves, stood at USD 566.791 billion. Gold reserves currently amount to USD 67.573 billion.
Foreign exchange reserves (FX reserves) are assets held by a nation’s central bank, mainly in reserve currencies like the US Dollar, with smaller portions in the Euro, Japanese Yen, and Pound Sterling.
The RBI monitors foreign exchange markets and intervenes to maintain order and curb excessive Rupee volatility, without targeting a fixed level. It manages liquidity, often by selling dollars, to prevent steep Rupee depreciation. A decade ago, the Rupee was one of Asia’s most volatile currencies, but the RBI’s strategy of buying dollars when the Rupee is strong and selling when it weakens has stabilized it.
(With ANI Inputs)