In second consecutive week of decline, India’s forex reserves drop $2.28 billion to $640.33 billion

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Last Updated29/04/2024

India’s forex reserves decreased USD 2.282 billion to USD 640.334 billion, the Reserve Bank of India (RBI)
The reserves had dropped USD 5.401 billion to USD 643.162 billion in the previous reporting week.

The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global events,
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 continued to rise and increased USD 1.01 billion to USD 56.808 billion during the week, the RBI said.

Also called Forex Reserves are reserve assets held by a central bank in foreign currencies.
These may include foreign currencies, bonds, treasury bills, and other government securities.
Reserves are denominated and expressed in the US dollar, which is the international currency for the purpose.
RBI is the custodian of the Foreign exchange reserves in India.
India’s foreign exchange reserves comprise of;
- Foreign currency assets (FCAs):These are maintained in currencies like the US dollar, euro, pound sterling, Australian dollar and Japanese yen.
- Gold
- SDR (Special Drawing Rights): This is the reserve claim with the IMF.
- RTP (Reserve Tranche Position): This is the reserve capital with the IMF.

They are used to back liabilities on their own issued currency, support the exchange rate and set monetary policy.
To ensure that RBI has backup funds if their national currency rapidly devalues or becomes altogether insolvent.
If the value of the Rupee decreases due to an increase in the demand of the foreign currency, then RBI sells the dollar in the Indian money market so that depreciation of the Indian currency can be checked.
A country with a good stock of forex represents a good image at the international level because the trading countries are assured about their payments.
A good forex reserve helps in attracting foreign trade and earns a good reputation.

A reserve tranche is a portion of the required quota of currency each member country must provide to the International Monetary Fund (IMF) that can be utilised for its own purpose without a service fee or economic reform conditions.

Are an international reserve asset created by the International Monetary Fund (IMF) to supplement the existing reserves of member countries.
The value of an SDR is based on a basket of international currencies, currently including the US dollar, euro, Chinese yuan, Japanese yen, and British pound sterling.