December 27th 2024.
In Mumbai, the Reserve Bank of India (RBI) announced on Friday that the country's foreign exchange reserves have decreased by $8.478 billion to reach $644.391 billion for the week ending on December 20. This follows a previous decline of $1.988 billion in the previous week, bringing the reserves to a six-month low of $652.869 billion. This downward trend has been ongoing for the past few weeks and has been attributed to a mix of revaluation and intervention by the RBI in the forex market, with the goal of stabilizing the rupee's volatility. It is worth noting that the reserves had reached an all-time high of $704.885 billion in the month of September.
According to the data released on Friday, the primary contributor to this decline was a decrease of $6.014 billion in foreign currency assets, which make up a significant portion of the reserves and now stand at $556.562 billion. It is important to mention that these foreign currency assets also take into account the impact of fluctuations in the value of non-US units such as the euro, pound, and yen, which are held in the foreign exchange reserves.
The RBI also reported a decrease of $2.33 billion in gold reserves, which now stand at $65.726 billion. Additionally, the Special Drawing Rights, which are a type of international reserve asset created by the International Monetary Fund (IMF), decreased by $112 million to reach $17.885 billion, as per the central bank's data. Finally, India's reserve position with the IMF also saw a decline of $23 million to reach $4.217 billion during the reporting week.
Overall, the decline in India's foreign exchange reserves raises concerns about the country's economic stability and its ability to withstand external shocks. However, the RBI continues to closely monitor the situation and has taken measures to reduce the impact of market fluctuations on the rupee. As the country moves forward, it will be important to closely track the changes in the forex reserves and their impact on the overall economy. This is PTI reporting from Mumbai.
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