India’s foreign exchange reserves experienced a notable decline of $7.794 billion, reaching $690.693 billion by May 1, as the Reserve Bank of India intervened in the forex market amidst global pressures and a depreciating rupee.
Illustration: Dado Ruvic/Reuters
Key Points
- India’s forex reserves decreased by $7.79 billion to $690.69 billion for the week ended May 1.
- This decline follows a previous drop of $4.82 billion in the week prior, bringing the total down from an all-time high of $728.49 billion in February.
- The fall is attributed to the rupee coming under pressure, necessitating RBI intervention in the forex market through dollar sales, partly due to the Middle East conflict.
- Foreign currency assets, a major component, decreased by $2.8 billion, while gold reserves saw a significant drop of $5.02 billion.
- Special Drawing Rights (SDRs) and India’s reserve position with the IMF, however, registered slight increases.
India’s forex reserves dropped by $7.79 billion to $690.69 billion during the week ended May 1, the RBI said on Friday.
In the previous reporting week ended April 24, the overall reserves had declined by $4.82 billion to $698.49 billion.
Impact of Global Events on Reserves
The kitty had expanded to an all-time high of $728.49 billion during the week ended February 27 this year before the beginning of the West Asia conflict, which led to several weeks of a drop as the rupee came under pressure and the RBI had to intervene in the forex market through dollar sales.
For the week ended May 1, foreign currency assets, a major component of the reserves, decreased by $2.8 billion to $551.82 billion, the central bank’s data showed.
Components of Forex Reserves
Expressed in dollar terms, the foreign currency assets include effects of appreciation or depreciation of non-US units, such as the euro, pound, and yen, held in the foreign exchange reserves.
Value of gold reserves decreased by $5.02 billion to $115.22 billion during the week, the RBI said.
The Special Drawing Rights (SDRs) were up $15 million to $18.79 billion, the apex bank said.
India’s reserve position with the IMF was also up by $8 million to $4.86 billion at the end of the reporting week, according to the apex bank’s data.
