India's Forex Reserves Fall By $2.39 Billion To $560 Billion As per the reports, the exchange reserves recovered last week and stood at $562.40 billion as of the week ended March 3, 2023
By Teena Jose •
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The Reserve Bank of India (RBI) released data on Friday revealing that India's forex reserves declined by $2.39 billion to $560 billion as of March 10, 2023, according to a PTI report.
Last week, India's exchange reserves rose for the first time after a consecutive decline for four weeks. As per the available reports, the exchange reserves recovered last week and stood at $562.40 billion as of the week ended March 3, 2023. This recovery was the first increase after a total decline of $15.8 billion in preceding four weeks.
On an annualised basis, the RBI said, the reserves are down by $47.31 billion during the week under review while on a fiscal year basis, the same plunged by $ 62.23 billion. With this erosion, the forex kitty is at the lowest since early-December, according to the weekly statistical supplement released by RBI.
Expressed in dollar terms, foreign currency assets include the effect of appreciation or depreciation of the non-US units like the euro, the pound and the yen held in the foreign exchange reserves. The reserve losses are primarily due to the RBI selling dollars to stem the rupee volatility in the spot and forwards market to prevent runaway moves in the exchange rate, as per the report.
Furthermore, the report stated that India's forex reserves reached an all-time high of $645 billion in October 2021. Also, India's foreign currency assets (FCA) , which includes the impact of non-US currencies such as the euro, pound, and yen, dropped by 2.2 billion to $494.86 billion.
Reserve Bank of India Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. Reserve Bank of India accumulates foreign currency reserves by purchasing from authorized dealers in open market operations. Foreign exchange reserves of India reportedly act as a cushion against rupee volatility once global interest rates start rising
