Marginal Decline In India's Foreign Exchange Reserves: RBI Report

Mumbai, Jan 27 (KNN) India's foreign exchange reserves have witnessed a marginal decline of USD 2.795 billion, settling at USD 616.143 billion for the week ending 19 January 2023, according to recent data released by the Reserve Bank of India (RBI).

The key component of the forex reserves, foreign currency assets (FCA), experienced a decrease of USD 2.653 billion, reaching USD 545.855 billion during the same week, as reported in the central bank's weekly statistical data.

Gold reserves also saw a reduction of USD 34 million, standing at USD 47.212 billion. Notably, in the calendar year 2023, the RBI increased its foreign exchange reserves by approximately USD 58 billion, following a cumulative decline of USD 71 billion in 2022.

Forex reserves, also known as foreign exchange reserves (FX reserves), are assets held by a nation's central bank or monetary authority, typically in reserve currencies like the US Dollar, Euro, Japanese Yen, and Pound Sterling.

The recent marginal decline in reserves can be attributed to the increased cost of imported goods in 2022.

Additionally, it may be linked to the RBI's periodic intervention in the market to counter the uneven depreciation of the rupee against a strengthening US dollar.

The RBI engages in market interventions through liquidity management, including the sale of dollars, to prevent a steep depreciation of the rupee.

These interventions are conducted without reference to any pre-determined target level or band.

The central bank closely monitors foreign exchange markets, intervening to maintain orderly market conditions and contain excessive volatility in the exchange rate.

Although the decline is marginal on a cumulative basis, it reflects the intricate balance the RBI maintains to safeguard the stability of the country's foreign exchange reserves amidst global economic dynamics.

(KNN Bureau)