India's Forex Reserves Clock Biggest Weekly Decline In Over 11 Months

According to RBI statistical supplement, forex reserves stood at $566.95 billion at the end of last week, down from $575.27 billion at the end of the prior week

Last week, the rupee fell 0.8 per cent against the US dollar, its biggest such decline in two months.

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Reserve Bank of India's (RBI) data on Friday showed that India's foreign exchange reserves fell 8.3 per cent in the week of February 10. This is the biggest decline in the country’s foreign exchange reserves in more than 11 months. 

According to RBI statistical supplement, forex reserves stood at $566.95 billion at the end of last week, down from $575.27 billion reported at the end of the prior week. Reserves dropped by $1.494 billion in the week ending on February 3, snapping a three-week rising trend.

For the week ending on February 10, the foreign currency assets, a major component of the reserves, decreased by $7.108 billion to $500.587 billion, according to the RBI’s Statistical Supplement. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound, and yen held in the foreign exchange reserves.

Gold reserves decreased by $919 million to $42.862 billion, the RBI said.

The Special Drawing Rights (SDRs) were down by $190 million to $18.354 billion. The country's reserve position with the IMF declined $102 million to $5.145 billion in the reporting week, the data showed.

To avoid exchange rate volatility, the central bank makes interventions in the spot and futures markets. The RBI has previously said that changes in reserves also result from gains or losses in valuation.

Last week, the rupee fell 0.8 per cent against the US dollar, its biggest such decline in two months, and traded in the range of 82.3400 to 82.7950. The rupee traded in an 82.5750 to 82.8975 band this week and ended at 82.83.

In October 2021, the country's foreign exchange reserves reached an all-time high of $645 billion. However, the reserves have been declining since RBI deployed the kitty to defend the rupee amid pressures caused by global developments.