What’s behind the continuous decline?, India forex reserves, rbi on forex reserves, rupee value, indian rupee against us dollars
Mumbai (Maharashtra): India’s foreign exchange reserves have dropped for the sixth consecutive week, standing at USD 625.87 billion as of January 10, marking a ten-month low, according to the Reserve Bank of India (RBI).
As per the latest data from the RBI, India’s foreign exchange reserves saw a decline of USD 8.72 billion, down from the previous value of USD 634.59 billion. The reserves have been on a downward trajectory since reaching an all-time high of USD 704.89 billion in September.
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The ongoing decline in reserves is primarily attributed to RBI’s efforts to curb a sharp depreciation of the Indian rupee, which recently touched an all-time low against the US dollar, surpassing the 86 mark. The central bank has been intervening in the forex market to prevent excessive volatility and maintain market stability.
As of January 10, the foreign currency assets (FCA), the largest component of forex reserves, stood at USD 536.011 billion. Meanwhile, gold reserves have risen by USD 792 million, reaching USD 67.883 billion.
Despite the recent fall, the RBI has reassured that the country’s forex reserves are sufficient to cover over 11 months of imports and about 96 percent of the outstanding external debt as of June 2024. The RBI also emphasized that India’s forex reserves remain robust, as shown by sustainable reserve adequacy levels.
In 2023, India added around USD 58 billion to its forex reserves, compared to a decline of USD 71 billion in 2022.
The RBI monitors the foreign exchange market closely, intervening only when necessary to ensure orderly market conditions and curb excessive volatility in the rupee exchange rate. These interventions are aimed at enhancing the attractiveness of Indian assets to investors.
Over the past decade, the Indian rupee has become one of Asia’s most stable currencies. The RBI has adopted a strategic approach, buying dollars when the rupee strengthens and selling when it weakens, helping attract global investment to India.
