According to the RBI, India’s foreign exchange reserves fell by $30 million to $594.858 billion in the week ending August 25. It had declined by US$7.273 billion to US$594.888 billion in the previous reporting week.
The central bank has been spending money from its capital reserves to protect the rupee since last year as global economic growth is putting pressure on the reserves.
The Reserve Bank of India (RBI) has given a big update on India’s foreign exchange reserves today. According to RBI, there has been a decline in the country’s forex reserves for the second consecutive week.
India’s foreign exchange reserves declined by USD 30 million to USD 594.858 billion in the week ended August 25, RBI said. In the previous reporting week, the total reserves decreased by US$ 7.273 billion to US$ 594.888 billion.
Foreign exchange reserves were at a high level at this time
Let us tell you that in October 2021, the country’s foreign exchange reserves had reached an all-time high of US $ 645 billion. Since last year, amid pressure due to global growth, the central bank had spent from capital reserves to protect the rupee, which has affected the reserves.
Foreign currency assets also decreased
For the week ended August 25, foreign currency assets, which form a major component of foreign exchange reserves, declined by US$ 538 million to US$ 527.249 billion.
Gold reserves increased
Releasing the data, the RBI said that gold reserves increased by US$ 530 million to US$ 44.354 billion.
Apart from this, RBI said that Special Drawing Rights (SDR) declined by US$ 11 million to US$ 18.194 billion. The country’s reserve position with the IMF also declined by US$12 million to US$5.061 billion in the week under review.
How important are foreign exchange reserves for a country?
Foreign exchange reserves act as a protection against sharp declines in the value of a country’s currency during times of market volatility. Central banks may supply dollars or other reserve currencies to stabilize their domestic currency and prevent excessive depreciation. This helps in maintaining stability in international trade and investment.
