NEW DELHI: India’s foreign exchange reserves have dropped for the sixth straight week, reaching a ten-month low of $625.87 billion as of 10 January, according to data from the Reserve Bank of India (RBI). This marks a decline of $8.72 billion against the previous week, continuing the slump from the all-time high of $704.89 billion recorded in September.
The drop in reserves is widely due to the RBI’s intervention to curb the sharp depreciation of the Indian rupee, which has weakened beyond the 86 mark against the US dollar, its lowest level on record.
The latest figures by the apex bank show India’s foreign currency assets (FCA), the largest component of forex reserves, stand at $536.01 billion. Meanwhile, gold reserves have risen by $792 million, reaching $67.88 billion.
Despite the recent declines, the RBI reassured in December that the reserves remain strong, sufficient to cover more than 11 months of imports and 96 per cent of the external debt outstanding as of June 2024. The central bank highlighted that reserve adequacy metrics remain sustainable.
India’s foreign exchange reserves saw a stark contrast between 2022 and 2023, with a net increase of $58 billion in 2023 compared to a cumulative decline of $71 billion the previous year.
The RBI continues to monitor foreign exchange markets, intervening when necessary to ensure orderly market conditions and limit excessive volatility in the rupee’s exchange rate. By strategically buying dollars during periods of rupee strength and selling during weakness, the RBI has enhanced the rupee’s stability.
Over the last decade, the rupee has transformed from one of Asia’s most volatile currencies to one of its most stable, strengthening the appeal of Indian assets for global investors.
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