India's forex reserves ease after hitting over nine-month highs

 India's forex reserves ease after hitting over nine-month highs

India's forex reserves dropped by USD 2.164 billion to USD 584.248 billion for the week ended April 21, the Reserve Bank said on Friday.  In the previous reporting week, the overall kitty had risen by USD 1.657 billion to USD 586.412 billion.  It can be noted that in October 2021, the country's forex kitty had reached an all-time high of USD 645 billion.

The reserves have been declining as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global developments.

For the week ended April 21, the foreign currency assets, a major component of the reserves, decreased by USD 2.146 billion to USD 514.489 billion, according to the Weekly Statistical Supplement released by the RBI.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.

Gold reserves dropped by USD 24 million to USD 46.151 billion, the RBI said.

The Special Drawing Rights (SDRs) were up by USD 19 million to USD 18.431 billion, the apex bank said.

The country's reserve position with the IMF was down by USD 14 million to USD 5.176 billion in the reporting week, the apex bank data showed.

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. 

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.