India’s foreign exchange reserves fell again, despite a rebound in gold, down to $695.49 billion
India’s foreign exchange reserves fell by $1.18 billion, marking a third consecutive week of declines for the week ended July 18, according to official data released by the Reserve Bank of India (RBI). In the final week of the review, the country’s foreign exchange reserves fell by $3.06 billion to $696.67 billion.
Major components of foreign exchange reserves Forex assets in the week ended July 18 were US$1.21 billion to US$5876.06 billion, which may be the main reason for the decline in foreign exchange reserves.
On the other hand, another key component of foreign exchange reserves, gold reserves recovered impressively after a decline last week and rose by $150 million to $8.499 billion after falling last week’s $498 million.
India’s special drawing rights (SDR) with the International Monetary Fund (IMF) further fell by $119 million to $18.683 billion.
Central banks around the world are increasingly accumulating sheltered payments in foreign exchange reserves, and India is no exception. Since 2021, the Reserve Bank of India (RBI) has nearly doubled its share of gold in its foreign exchange reserves.
In 2023, India increased its foreign exchange reserves by about $58 billion, while its cumulative decline in 2022 was $71 billion. In 2024, reserves rose by more than $20 billion and hit an all-time high of $704.885 billion by the end of September 2024.
Governor Sanjay Malhotra announced that India’s foreign exchange reserves (forex) are sufficient to meet 11 months of imports, with about 96% of foreign debt.
Foreign exchange reserves or foreign exchange reserves are assets held by a country’s central bank or monetary authorities, mainly in reserve currencies of reserve funds (such as the US dollar), the euro, the yen and the pound are smaller.
To prevent a sharp drop in the rupee, the Reserve Bank of India often intervenes through liquidity management, including the sale of US dollars. When the rupee is strong, the RBI strategically bought the dollar and sold it when the rupee is weak.
Input with ANI
