New Delhi, March 9 (ANI): India’s foreign exchange reserves have experienced a significant decline, dropping by USD 1.781 billion to stand at USD 638.698 billion for the week ending February 28, according to the latest data from the Reserve Bank of India (RBI).
The decline marks the continuation of a trend observed over the past few months, with reserves previously slumping to an 11-month low. This follows a period of fluctuating movements, with occasional gains interspersed with periods of decline.
India’s foreign exchange reserves peaked at a record high of USD 704.89 billion in September 2021, but have since fallen by approximately 10 percent from this all-time high. The drop in reserves is primarily attributed to the RBI’s efforts to stabilize the Indian Rupee, which has been grappling near its historic low against the US Dollar.
As of the latest RBI figures, India’s foreign currency assets (FCA), the largest component of its forex reserves, amounted to USD 543.350 billion. Additionally, gold reserves stood at USD 73.272 billion.
Despite the recent decline, India’s foreign exchange reserves are estimated to be sufficient to cover roughly 10 to 11 months of projected imports, providing a cushion for the nation’s trade and economic stability.
In contrast to the USD 71 billion decline in reserves during 2022, India managed to add approximately USD 58 billion to its reserves in 2023. So far in 2024, reserves have seen a moderate increase of just over USD 20 billion.
The RBI plays a critical role in managing the country’s forex reserves, often intervening in the market to prevent excessive depreciation of the Rupee. By buying dollars when the Rupee is strong and selling when it weakens, the central bank helps mitigate sharp fluctuations in the currency’s value.
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