Forex Reserves Fall as RBI Reports Sharp Decline

RBI Reports Sharp Fall in Forex Reserves Amid Rupee Pressure

Forex Reserves Decline Continues

India’s foreign exchange reserves witnessed a sharp decline in the last week of March, reflecting sustained pressure on the rupee and global currency movements. The Reserve Bank of India (RBI) reported a drop of 10.288 billion dollars, bringing total reserves down to 688.058 billion dollars.

This follows another weekly decline of 11.414 billion dollars, taking the cumulative fall over two consecutive weeks to around 22 billion dollars.

Drop Linked to Currency Volatility

The decline has been attributed to the weakening rupee and a fall in the value of foreign currency assets. The value of assets held in currencies such as the euro, pound, and yen has seen fluctuations, contributing to the overall reduction.

The central bank indicated that volatility in non-dollar currencies impacted the valuation of reserves held in foreign currency form.

Foreign Currency Assets See Major Dip

Foreign currency assets, a major component of reserves, declined by 6.622 billion dollars to 551.072 billion dollars for the week ending March 27. This segment reflects the impact of exchange rate movements across major global currencies.

The pressure on these assets remains a key factor in the overall decline of forex reserves.

Gold Reserves Also Decline

Gold reserves recorded a notable fall during the same period. According to RBI data, gold holdings dropped by 3.666 billion dollars to 113.521 billion dollars.

The reduction in gold reserves has further contributed to the overall fall in the country’s reserve position.

SDR and IMF Reserves Show Mixed Trend

Special Drawing Rights (SDRs) saw a marginal increase of 17 million dollars, reaching 18.649 billion dollars. In contrast, India’s reserve position with the International Monetary Fund (IMF) declined by 17 million dollars to 4.816 billion dollars.

These components showed limited movement compared to the broader decline in foreign currency assets and gold reserves.

Context: Decline After Record High

India’s forex reserves had reached a record high of 728.494 billion dollars in the last week of February this year. However, within a month, reserves have declined by around 30 billion dollars.

The ongoing pressure is linked to global developments, including tensions in West Asia, which have affected currency stability and market conditions.