India's foreign reserves dip by $5.4 billion, stepping back from their record high.
India's foreign exchange reserves have declined by $5.4 billion, marking a retreat from their all-time peak.
Summary
According
to the latest data released by the Reserve Bank of India (RBI), India's foreign
exchange reserves experienced a decrease of $5.4 billion, reaching $643.16
billion as of April 12. This decline contrasts with the preceding week's surge
of $2.9 billion, which propelled reserves to a record high of $648.56 billion.
The primary driver behind this decline was a decrease of $6.51 billion in
foreign currency assets (FCAs), encompassing assets denominated in currencies
other than the US dollar.
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The
Reserve Bank of India's latest data, released on Friday, revealed that India's
foreign exchange reserves shrank by $5.4 billion to reach $643.16 billion as of
April 12th.
In
the week ending April 5, 2024, India's foreign exchange reserves experienced a
notable increase of $2.9 billion, reaching an unprecedented peak of $648.56
billion.
As
per the Weekly Statistical Supplement issued by the RBI, Foreign Currency
Assets (FCAs) recorded a decline of $6.51 billion, settling at $564.65 billion.
FCAs, when measured in dollar terms, encapsulate the impact of fluctuations in
non-US currencies such as the euro, pound, and yen, held within the foreign exchange
reserves.
Gold
reserves increased by $1.24 billion to reach $55.8 billion, while Special
Drawing Rights (SDRs) declined by $93 million to $18.08 billion. Additionally,
the reserve position in the IMF decreased by $35 million to $4.63 billion. Also,
Foreign Institutional Investors (FIIs) have divested nearly 22,000 crores worth
of Indian equities in the month of April up to date. This outflow of funds by
FIIs has exerted downward pressure on the USD/INR exchange rate.
Periodically,
the RBI intervenes in the market by managing liquidity, which may involve
selling dollars to mitigate the sharp depreciation of the rupee. The RBI diligently
oversees foreign exchange markets and intervenes solely to uphold orderly
market conditions, aiming to curb excessive volatility in exchange rates,
without adhering to any predetermined target level or range.
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