India’s FOREX Reserves Hit Lowest Level In 2 Years, Read To Know More About The Reserves!!

India’s foreign exchange reserves have come down to a two-year low on October 21, to $ 524.520 billion. There was a decrease of $3.85 billion in foreign exchange reserves compared to a week before that. According to RBI data, for the previous week ended October 14, forex reserves stood at $ 528.367 billion. Let us tell you that two years ago, India’s foreign exchange reserves were about $ 577.00 billion.

According to the latest RBI data, foreign currency assets, the largest component of foreign exchange reserves, declined by $3.59 billion to USD 465.075 billion.
The country’s gold reserves declined by $247 million to reach $37.206 billion during this period. However, RBI data shows that the value of India’s Special Drawing Rights (SDR) with the International Monetary Fund rose by $7 million to $17.440 billion during the week under review.

The forex reserves have been showing a decline in the past few months as RBI intervenes in the market possibly to arrest the rupee’s depreciation against the rising US dollar. On the other hand, rising cost of imported goods has also necessitated higher requirement of foreign exchange reserves for trade settlement, thereby reducing it.

The Indian rupee has weakened to a new all-time low in the past few weeks as the US dollar strengthened against major global currencies. Last week, for the first time in history, the rupee crossed the level of Rs 83 against the dollar. The rupee has depreciated by about 10-12 percent so far this year.

Usually, RBI intervenes in the market through liquidity management, including selling of the dollar, to prevent a steep fall in the rupee. India’s foreign exchange reserves had fallen by nearly USD 100 billion since Russia invaded Ukraine in late February. This was due to the costly imports of energy and other commodities globally. During the last 12 months, there has been a decline in foreign exchange reserves by about US$ 115 billion on a cumulative basis.