India’s foreign exchange reserves fell sharply by $4.112 billion to $640.279 billion in the week ending December 27, according to data released by the Reserve Bank of India (RBI) on Friday. This marks a continuation of the declining trend, with the reserves dropping by $8.478 billion the previous week to $644.391 billion.
The decline has been attributed to a combination of currency revaluation and the RBI’s interventions in the forex market to curb rupee volatility. India’s forex reserves had peaked at an all-time high of $704.885 billion at the end of September before beginning their downward trajectory.
The fall in reserves was primarily driven by a $4.641 billion decrease in foreign currency assets, which now stand at $551.921 billion. These assets, expressed in dollar terms, account for the valuation effects of non-US currencies such as the euro, pound, and yen held in the reserves.
On a positive note, gold reserves increased by $541 million, reaching $66.268 billion during the same period. However, Special Drawing Rights (SDRs) fell marginally by $12 million to $17.873 billion. The country’s reserve position with the International Monetary Fund (IMF) remained unchanged at $4.217 billion.
The fluctuations in forex reserves reflect ongoing global market pressures and the RBI’s active measures to stabilize the domestic currency, signaling the challenges of maintaining a robust external account amidst volatile conditions.
