For the previous week, India’s foreign exchange reserves dropped to $675.65 billion as of November 8.
The Weekly Statistical Supplement released by the RBI showed that the primary contributor to this decline was the drop in Foreign Currency Assets (FCAs), which fell by $15.5 billion to $569.84 billion.
Meanwhile, gold reserves dipped by $2 billion, bringing the total to $65.7 billion.
The Special Drawing Rights (SDRs) dipped by $94 million, now totalling $18 billion, while the reserve position in the International Monetary Fund (IMF) contracted by $51 million, standing at $4.2 billion.
India’s forex kitty
With its growing economic strength, India has achieved the significant feat of joining the ranks of the world’s largest foreign exchange reserves, securing the 4th position globally after China, Japan, and Switzerland.India’s economy is making new records every day. While there was a time when India’s economy was considered a part of the ‘Fragile Five’. But India’s rise from the “Fragile Five” to the fastest-growing major economy is an example for other developing countries.Today, India has not only become the fifth-largest economy in the world but has also set a new record in terms of foreign exchange reserves. For the first time in history, India’s foreign exchange reserves have reached above USD 700 billion.
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.
Content Source: economictimes.indiatimes.com