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India’s Forex Reserves Drop

India’s Forex Reserves Drop:

India’s forex reserves fell by USD 2.282 billion to USD 640.334 billion in the week ending 19th April 2024, as per the Reserve Bank of India (RBI).

  • Foreign currency assets decreased by USD 3.793 billion to USD 560.86 billion.
  • Gold reserves increased by USD 1.01 billion to USD 56.808 billion.
  • Special Drawing Rights (SDRs) decreased by USD 43 million to USD 18.034 billion.
  • Reserve position with the International Monetary Fund (IMF) declined by USD 2 million to USD 4.631 billion.
  • This decrease was primarily attributed to strategic interventions by the central bank, which deployed the reserves to defend the rupee amidst economic uncertainties and currency depreciation.
  • The RBI intervenes in the market to manage liquidity, including selling dollars to prevent sharp rupee depreciation and prevent excessive volatility in the exchange rate.
  • It can be noted that in April 2024, India’s forex kitty had reached an all-time high of USD 645.6 billion.