India’s foreign exchange reserves experienced a significant drop of USD 2.54 billion, bringing the total to USD 635.721 billion for the week ending February 14, according to the Reserve Bank of India (RBI). This decline snaps a three-week rising streak, during which the reserves had increased by USD 7.654 billion to USD 638.261 billion.
Historical Context
India’s forex reserves had reached an all-time high of USD 704.885 billion in September 2024. However, the reserves have since declined due to the RBI’s interventions in the forex market to reduce volatility in the rupee.
Breakdown of Reserves
For the week ending February 14, foreign currency assets, a major component of the reserves, decreased by USD 4.515 billion to USD 539.591 billion. Expressed in dollar terms, these assets include the effect of appreciation or depreciation of non-US units like the euro, pound, and yen held in the foreign exchange reserves.
On a positive note, gold reserves increased by USD 1.942 billion to USD 74.15 billion during the week. Additionally, the Special Drawing Rights (SDRs) were up by USD 19 million to USD 17.897 billion, and India’s reserve position with the International Monetary Fund (IMF) rose by USD 14 million to USD 4.083 billion.
Conclusion
The recent decline in India’s forex reserves highlights the ongoing challenges in managing the country’s foreign exchange assets. As the RBI continues to monitor and intervene in the forex market, the fluctuations in reserves will remain a key indicator of India’s economic stability and foreign trade dynamics. For more detailed information, you can find it here.
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