Indian Forex Reserves Decline USD 4.3 Billion, Hit One-Month Low

New Delhi: India's overall foreign exchange reserves declined from USD 4.339 billion to USD 589.138 billion in the week that ended on May 26, 2023, data released by Reserve Bank of India on Friday showed. A week ago, the foreign exchange reserves declined by USD 6.05 billion to USD 593.477 billion.

India's foreign currency assets, the biggest component of the forex reserves, declined by USD 4.014 billion to USD 520.931 billion, the latest data showed. Gold reserves during the latest week declined by USD 225 million to USD 44.902 billion.

In October 2021, the country's foreign exchange reserves touched an all-time high of about USD 645 billion. Much of the decline since then can be attributed to a rise in the cost of imported goods in 2022. Also, the forex reserves had fallen largely because of the RBI's intervention in the market to defend the depreciating rupee against a surging US dollar.

Typically, the RBI, from time to time, intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee. The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band.