India’s foreign exchange reserves broke their 8 week long rising streak, falling $2.06 billion in the week ending 2 May, as per the latest data from the Reserve Bank of India (RBI).The fall brings India’s total forex reserves down to $686.06 billion, after they had surged $1.98 billion to $688.13 billion in the week ending 25 April.Foreign currency assets, the largest component of India’s forex reserves rose slightly by $514 million to $581.18 billion. These assets reflect the value of major global currencies such as the euro, pound sterling, and Japanese yen, and are expressed in US dollar terms.However, the rise in foreign currency assets was offset by a $2.55 million drop in gold reserves, which fell to $81.82 billion. SDRs or special drawing rights, which are kept with the IMF, also slipped by $30 million reaching $18.56 billion.The central bank also estimated that the reserves are sufficient to cover projected imports for almost 10-12 months.The current movement follows a pattern seen since September, when reserves had peaked at a record high of $704.89 billion before gradually falling, likely due to the RBI’s interventions in the forex market aimed at curbing volatility and defending the Rupee, which remains near its historic lows against the US dollar.The central bank continues to manage liquidity in the currency markets by selling dollars during periods of Rupee weakness and accumulating reserves when the currency is strong.Last year, forex reserves added more than $20 billion. In 2023, the forex kitty soared by almost $58 billion, a sharp reversal from the $71 billion decline recorded in 2022. These foreign exchange reserves are held by a country’s national bank, in mostly reserve currencies like US dollar, with smaller portions in Euro, Yen and Pound Sterling.
