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Published: Jan 14, 2023
Updated: Jan 14, 2023

India's Forex Reserves Dip by $1.268 Billion, Gold Reserves Rise

India's forex reserves have decreased by $1.268 billion to $561.583 billion for the week ending January 6, 2021, as per the Reserve Bank of India (RBI). This marks a decline after two consecutive weeks of slide and a decrease from the all-time high of $645 billion reached in October 2021. The decrease in reserves is a result of the central bank deploying reserves to defend the rupee against pressures caused by global developments.

Foreign Currency Assets:

The major component of overall reserves, foreign currency assets (FCA), dropped by $1.747 billion to $496.441 billion during the week ending January 6, as per the Weekly Statistical Supplement released by the RBI. Expressed in dollar terms, FCA includes the effect of appreciation or depreciation of non-US units like the euro, pound, and yen held in the foreign exchange reserves.

Gold Reserves:

On the other hand, gold reserves increased by $461 million to $41.784 billion, as per the RBI. This increase in gold reserves could be due to the safe-haven demand for the precious metal, as investors flock to it during times of economic uncertainty.

Special Drawing Rights:

The Special Drawing Rights (SDRs) held by India also increased by $35 million to $18.217 billion, as per the apex bank. SDRs are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF).

Reserve Position with IMF:

India's reserve position with the International Monetary Fund (IMF) decreased by $18 million to $5.141 billion during the week ending January 6, as per the data.

Global Developments put pressure on RBI to deplete forex reserves

In conclusion, India's forex reserves have decreased by $1.268 billion to $561.583 billion for the week ending January 6, 2021, as per the Reserve Bank of India (RBI). The decrease in reserves is a result of the central bank deploying reserves to defend the rupee against pressures caused by global developments. On the other hand, gold reserves increased by $461 million to $41.784 billion and Special Drawing Rights (SDRs) held by India also increased by $35 million to $18.217 billion. The Reserve Position with the IMF decreased by $18 million to $5.141 billion. The fluctuations in reserves are closely watched by investors, as it can indicate the country's economic and financial stability. India's reserves are also closely monitored by the International Monetary Fund (IMF) and other global organisations.