Parul
India’s foreign exchange reserves continue to decline, extending their slump for over three months now. India’s forex reserves have slumped thirteen out of the past fourteen weeks, hitting about a 10-month low. In the week that ended January 3, the country’s foreign exchange kitty declined by USD 5.693 billion to USD 634.585 billion, the latest data from the Reserve Bank of India showed.
The reserves had been falling ever since it touched an all-time high of USD 704.89 billion in September. Effectively, they are now over 10 per cent lower from the peak.
The reserves have been declining likely due to RBI intervention, aimed at aggressively preventing a sharp depreciation of the Rupee. The Indian rupee is now at its all-time low against the US dollar.
The latest RBI data showed that India’s foreign currency assets (FCA), the largest component of forex reserves, stood at USD 545.480 billion.
Gold reserves currently amount to USD 67.092 billion, with a USD 824 million jump last week, according to RBI data.
Estimates suggest that India’s foreign exchange reserves are sufficient to cover approximately one year or near-about of projected imports. In 2023, India added around USD 58 billion to its foreign exchange reserves, contrasting with a cumulative decline of USD 71 billion in 2022.
In 2024, the reserves rose by a little over USD 20 billion. Without the latest decline, the reserves would have been much higher.
