India's forex reserves drop by $462 million to $590.321 billion

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India's forex reserves drop by $462 million to $590.321 billion
Credit: © Reuters.

NEW DELHI - The Reserve Bank of India (RBI) has reported a decline in India's foreign exchange reserves, with a net decrease of $460 million, bringing the total to $590.32 billion as of the week ending on Thursday. This shift interrupts a previous increase in reserves due to active measures taken by the RBI to support the rupee amidst global economic uncertainties, which had seen gains of $7.3 billion over two weeks.

The change in reserves is primarily attributed to the central bank's currency market interventions aimed at managing the volatility in foreign exchange rates. Despite the overall decrease, foreign currency assets experienced a slight increase of $108 million, totaling $522.004 billion. This marginal gain suggests that the RBI's strategic interventions have had a nuanced impact on the composition of the reserves.

In contrast, gold reserves saw a significant reduction, dropping by $608 million to stand at $45.515 billion. The decline in gold reserves is a notable factor in the overall decrease in forex reserves.

Additionally, there was a modest increase in Special Drawing Rights (SDRs) with the International Monetary Fund (IMF), which rose by $36 million. India's reserve position with the IMF also saw a slight increment of $3 million.

The current level of reserves marks a decrease from October 2021 when India's forex reserves peaked at an all-time high of $645 billion. The fluctuation in reserves is reflective of the RBI's ongoing efforts to ensure stability in the financial markets amid shifting global economic dynamics.

On Thursday, the rupee hit a historic low of 83.42 against USD but stabilized to close at 83.27 by the end of the week.

The RBI released its monthly bulletin on Thursday noting an enduring external sector with slight Current Account Deficit (CAD) and robust capital inflows that contribute to the rupee's minimal weekly movement and status as one of the least volatile currencies internationally. These factors, along with the RBI's strategic interventions, are helping to maintain a level of stability in the face of global economic shifts.

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