Business

India’s forex reserves drop by USD 8.478 billion to USD 644.391 billion

newsnow9December 27, 202403 mins

Mumbai: The country’s forex reserves dropped by a further USD 8.478 billion to USD 644.391 billion for the week ended December 20, the RBI said on Friday.

In the previous reporting week, the reserves had dropped by USD 1.988 billion to a six-month low of USD 652.869 billion.

The reserves have been declining for the last few weeks, and the drop has been attributed to revaluation along with forex market interventions by RBI to help reduce volatilities in the rupee. The forex reserves had increased to an all-time high of USD 704.885 billion in end-September.

Foreign currency assets — a major component of the reserves — decreased $3.043 billion to $566.791 billion, the data showed. Meanwhile, gold reserves increased $1.828 billion to $67.573 billion during the week.

Additionally, the special drawing rights (SDRs) fell $79 million to $17.985 billion. India’s reserve position with the International Monetary Fund (IMF) was also down by $15 million to $4.232 billion in the reporting week.

A stronger dollar index and capital outflows have contributed to the sharp decline in India’s forex reserves, experts said. The RBI has been intervening in the foreign exchange market to curb volatility, which has also contributed to the fall.

The rupee depreciated by 0.48 per cent against the dollar in November, after falling by 0.25 per cent in October. In 2024, the domestic currency weakened by 1.52 per cent against the dollar.

In the previous week, the country’s forex reserves declined $17.76 billion —the sharpest weekly fall ever — to hit a four-month low of $657.8 billion for the week ended November 15, owing to the strengthening of the US dollar and the central bank’s dollar sales to limit volatility in the foreign exchange market.

The previous highest weekly fall in forex exchange reserves was $15.5 billion, recorded for the week ended October 24, 2008, during the global financial crisis.