India's Forex Reserves See A Decline Of $325 Million To $560 Billion

In the previous reporting week, the overall Forex reserves had declined $5.68 billion to $561.267 billion

In October 2021, the forex kitty reached an all-time high of $645 billion.

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India's foreign exchange (Forex) reserves declined $325 million to $560.942 billion as of February 24, making it the fourth consecutive week of decline in the kitty, the Reserve Bank of India said on Friday. In the previous reporting week, the overall reserves had declined $5.68 billion to $561.267 billion.

In October 2021, the forex kitty reached an all-time high of $645 billion. The reserves have been declining as the central bank deploys the reserves to defend the rupee amid pressures due to various factors, mainly global developments.

For the week ended February 24, the foreign currency assets, a major component of the reserves, decreased $166 million to $495.906 billion, according to the Weekly Statistical Supplement released by the RBI.

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 for the fourth week running and were down $66 million to $41.751 billion. The Special Drawing Rights (SDRs) also fell $80 million to $18.187 billion. The country's reserve position with the IMF was down $12 million to $5.098 billion in the reporting week, as per the RBI data.

Meanwhile, the rupee appreciated by 63 paise to close at a one-month high of 81.97 (provisional) against the US dollar on Friday, as fresh foreign fund inflows and positive domestic equities supported investor sentiments. Forex traders said positive PMI services data also boosted investor sentiments.

At the interbank foreign exchange market, the local unit opened at 82.28 against the American currency and finally settled at 81.97 (provisional) against the greenback, registering a gain of 63 paise over its previous close of 82.60. During the trading session, the rupee touched a high of 81.92 and a low of 82.35 against the dollar.

The Indian rupee touched a one-month high on hot services PMI data, said Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas.