India’s forex reserves decreased by $6.78 billion to $675.65 billion for the week ended November 8, according to data released by the Reserve Bank of India (RBI) on Friday (Nov. 15).
Foreign exchange reserves are assets held by a nation’s central bank or monetary authority, typically denominated in reserve currencies such as the US Dollar, Euro, Japanese Yen, and Pound Sterling.
After a remarkable run that saw them hitting an all-time high of $704.89 billion in end-September, India’s foreign exchange reserves have been declining for multiple weeks. In total, they have dropped $29.5 billion in the past six weeks.
Forex traders said that the drop in foreign currency assets has been attributed to the RBI’s likely intervention in the foreign exchange market in order to defend the domestic currency.
During the period, the RBI intervened in the market on both, selling and buying sides in the market. The RBI closely monitors foreign exchange markets and intervenes to maintain orderly conditions and mitigate excessive volatility in the rupee’s exchange rate.
In the last six weeks, the rupee continuously hit fresh record lows. On November 8, the rupee plunged to all-time low of 84.38 against US dollar. Its depreciation remains less severe than other Asian currencies.
The data released on Friday showed that foreign currency assets (FCA), a major component of reserves, decreased by $4.467 billion to $585.383 billion for the week ended November 8, 2024.
Expressed in dollar terms, FCA include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves. Traders also said the RBI’s interventions helped the rupee avert deeper losses.
