India's foreign exchange (Forex) reserves retreated from more than eight-month highs to $578.45 billion as of the week ended March 31, the Reserve Bank of India's (RBI) statistical supplement showed on Friday. That is a decrease of around $380 million from the previous week, according to the data.
The central bank intervenes in the spot and forwards markets to prevent runaway moves in the rupee which affects the overall reserves position while changes also stem from valuation gains or losses.
However, according to last week’s data, India's forex reserves rose $5.977 billion to $578.778 billion in the week ended March 24 in a second consecutive weekly increase. In the previous reporting week, the kitty had risen by $12.8 billion to $572.8 billion.
A comfortable level of foreign exchange reserves will further bolster macroeconomic stability, RBI Governor Shaktikanta Das said while announcing the bank's monetary policy decision on Thursday. The rupee moved in an orderly manner in 2022 and continues to do so in 2023, Das said.
In the week for which the forex reserves data pertains, the rupee ended 0.38 per cent higher against the dollar, having traded in a range of 82.08 to 82.4250 to the dollar.
In the current holiday-shortened week, the rupee strengthened past 82 per dollar for the first time since mid-March to end at 81.8850 on Thursday.
Meanwhile, in a surprise move he RBI's Monetary Policy Committee (MPC), headed by Governor Shaktikanta Das, on Thursday announced to keep policy rate unchanged at 6.5 per cent.
MPC unanimously decided to keep policy repo rate unchanged at 6.5 per cent. The decision to pause is for this meet only. "Monetary Policy Committee will not hesitate to take any action in future, says RBI Governor after hitting pause button on rate hike," Das said.
During the customary interaction with reporters after the announcement of the policy review the governor said, "If I have to characterise today's monetary policy in just one line...it's a pause, not a pivot."