In the week ending November 22, India’s foreign exchange (forex) reserves fell to USD 656.582 billion for the eighth consecutive week, according to the Reserve Bank of India (RBI). The foreign exchange reserves are in a downward phase after reaching an all-time high of USD 704.89 billion in September. They fell by around USD 1.31 billion in the week ending November 22.
The RBI’s intervention to stop the rupee’s devaluation, which serves as a significant foreign exchange reserve buffer to protect domestic economic activity from developments abroad, is the main cause of the decrease.
India’s foreign currency assets (FCA), comprising most of its foreign exchange reserves, were valued at USD 566.791 billion per the most recent RBI statistics. The current value of gold reserves is USD 67.573 billion.
The US dollar and other reserve currencies make up most of a country’s foreign currency reserves, with smaller amounts maintained in the euro, yen, and pound sterling.
Without aiming for a specific level, the RBI keeps an eye on the foreign exchange markets and steps in to preserve order and reduce excessive Rupee volatility. To avoid sharp Rupee depreciation, it controls liquidity, frequently by selling dollars. The RBI’s policy of purchasing dollars when the Rupee is strong and selling when it weakens has steadied the currency, which was among Asia’s most volatile ten years ago.
