Forex Reserves Drop By $6 Billion To $593.48 Billion, Says RBI Data

During the week ending on May 19, the foreign currency assets decreased by $4.654 billion, reaching a total of $524.945 billion

The decline in the forex reserve has halted a streak of two consecutive weeks of growth. ( Image Source :Getty )

The Reserve Bank of India (RBI) data on Friday showed that India's foreign exchange reserves dropped by $6.052 billion to $593.477 billion during the week ending May 19. 

The decline in the forex reserve has halted a streak of two consecutive weeks of growth. In the preceding reporting week, the total reserves had risen by $3.5 billion, bringing the overall amount to just below $600 billion.

According to the Weekly Statistical Supplement released by the RBI on Friday, during the week ending on May 19, the foreign currency assets decreased by $4.654 billion, reaching a total of $524.945 billion. These foreign currency assets are valued in dollars and take into account the impact of changes in value for currencies such as the euro, pound, and yen held in the foreign exchange reserves.

Foreign Currency Assets (FCAs) are held in diverse currencies like the US dollar, Euro, pound sterling, Australian dollar, etc.

The country's reserves of foreign currency hit an all-time high of $645 billion in October 2021. The reserves have been decreasing as the central bank has utilised its funds to support the rupee against pressure from international events. 

During the reporting week, Gold reserves dropped by $1.227 billion to $45.127 billion. The Special Drawing Rights (SDRs) were also down by $137 million to $18.276 billion. 

The country's reserve position with the IMF slipped by $35 million to $5.13 billion in the reporting week, the RBI data showed.

Forex reserves are essential assets maintained in foreign currencies by the central bank. They frequently support the exchange rate and have an impact on monetary policy. The RBI intervenes in the spot and forwards markets to stop the rupee from making unpredictable movements that have an impact on the overall reserves position. Forex changes also occur from valuation gains or losses. 

Earlier this week, Commerce and Industry Minister Piyush Goyal said that the country has a strong foreign exchange reserve and is in a comfortable position to meet all the requirements even in any worst-case scenario in the next five-six years.