India’s forex reserves dipped by $1.268 billion to $561.583 billion for the week ending on January 6, according to the latest data released by the Reserve Bank of India (RBI) on Friday. According to RBI’s Weekly Statistical Supplement, India’s foreign currency assets (FCA), a major component of the overall reserves, dropped by $1.747 billion to $496.441 billion during the week to January 6.
Foreign currency assets (FCA) include the effect of appreciation or depreciation of non-US units like the euro, pound, and yen held in the foreign exchange reserves.
However, the data also showed that the gold reserves increased by $461 million to $41.784 billion, and the Special Drawing Rights (SDRs) also increased by $35 million to $18.217 billion.
According to PTI, the overall reserves in the previous reporting week had increased by $44 million to $562.851 billion after consecutive sliding for two weeks straight.
The report also said that in October 2021, the country’s foreign exchange reserves reached an all-time high of $645 billion. However, the reserves had been declining since RBI deployed the reserves to defend the rupee amid pressures caused by global developments.
The RBI data also showed that India’s reserve position with the International Monetary Fund (IMF) has declined by $18 million to $5.141 billion in the reporting week.
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Foreign exchange reserves are kept in the form of a multi-currency portfolio that includes major currencies like the US dollar, Euro, Pound sterling, and Japanese yen, among others, but are evaluated in US dollars. When the dollar strengthens, the value of foreign currencies relative to the US currency falls, resulting in a nominal fall in the overall reserves position.