India's forex reserves saw steepest weekly decline in over 11 months

NEW DELHI: India's foreign exchange reserves declined by USD 8.319 billion to USD 566.948 billion in the week ending on February 10, according to the Reserve Bank of India's latest data. This is reported to be the sharpest slump in the overall forex reserves in over 11 months.

During the week that ended on February 3, the reserves declined by USD 1.494 billion to USD 575.267. According to RBI's latest data, India's foreign currency assets, the biggest component of the forex reserves, declined USD 7.108 billion to USD 500.587 billion.

Gold reserves declined by USD 919 million to USD 42.862 billion. At the start of last year 2022, the overall forex reserves were at about USD 633 billion. Much of the decline can be attributed to RBI's intervention and a rise in the cost of imported goods in recent times.

In October 2021, the country's foreign exchange reserves reportedly touched an all-time high of about USD 645 billion. The forex reserves had been intermittently falling for months now largely because of the RBI's intervention in the market to defend the depreciating rupee against a surging US dollar.

Typically, the RBI, from time to time, intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee. The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band, Union Finance Minister Nirmala Sitharaman had said in response to a question in recent Parliament session on whether the central bank has been using reserves to stem the fall in the Indian currency.