05 January,2025 04:48 PM IST | New Delhi | mid-day online correspondent
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India's foreign exchange reserves have been steadily declining for three months, ANI reported.
In the week that ended December 27, the country's foreign exchange kitty declined by USD 4.112 billion to USD 640.279 billion ,as per RBI data, ANI cited.
India's forex reserves have slumped twelve out of the thirteen weeks, reaching a new multi-month low.
The reserves had been declining since they reached an all-time high of USD 704.89 billion in September. They are now approximately 10 percent lower than their peak.
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The reserves have been falling, most likely as a result of RBI intervention aimed at forcefully preventing the rupee from depreciating sharply, ANI reported.
As per recent RBI data, India's foreign currency assets (FCA), which make up the majority of FX reserves, were worth USD 551.921 billion.
Gold reserves currently total USD 66.268 billion, according to RBI data, ANI cited.
According to estimates, India's foreign exchange reserves are sufficient to fund around a year's worth of projected imports.
In 2023, India gained around USD 58 billion to its foreign exchange reserves, compared to a cumulative decline of USD 71 billion in 2022, ANI reported.
In 2024, the reserves increased by a bit more than USD 20 billion. Without the recent fall, the reserves would have been far larger.
Foreign exchange reserves (FX reserves) are assets kept by a country's central bank or monetary authority, principally in reserve currencies such as the US dollar, with smaller amounts in the Euro, Japanese Yen, and Pound Sterling.
The RBI closely monitors foreign exchange markets, acting only to maintain orderly market conditions and reduce excessive volatility in the rupee exchange rate, without setting a specific target level or range, ANI reported.
To prevent the rupee from depreciating sharply, the RBI frequently intervenes by managing liquidity, including selling dollars.
A decade ago, the Indian rupee was one of the most volatile currencies in Asia. Since then, it has become one of the most stable currencies. The RBI has carefully purchased dollars when the rupee is strong and sold them when it falls, increasing the attraction of Indian assets to investors, ANI reported.
(With ANI inputs)
