India’s forex reserves decline by USD 691 million for week ending Dec 23

New Delhi [India], December 31 (ANI): India’s foreign exchange reserves fell by USD 691 million to USD 562.808 billion in the week that ended on December 23, Reserve Bank of India’s Bulletin Weekly Statistical Supplement latest data showed.
During the week that ended December 23, the country’s forex reserves were at USD 563.499 billion, earlier data showed. According to RBI’s latest data, India’s foreign currency assets, the biggest component of the forex reserves, declined by USD 1.13 billion to USD 498.490 billion.

Gold reserves, however, rose by USD 390 million to USD 40.969 billion.
At the start of 2022, the overall forex reserves were at USD 633.61 billion. Much of the decline can be attributed to RBI’s intervention and a rise in the cost of imported goods.

Barring the past five odd weeks till mid-December, the forex reserves had been intermittently falling for months now largely because of RBI’s intervention in the market to defend the depreciating rupee against a surging US dollar.
Typically, the RBI from time to time intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.

The Reserve Bank of India’s operations in Rupee’s defence have resulted in net sales of USD 33.42 billion till September 2022 of the current financial year, Union finance minister Nirmala Sitharaman informed Lok Sabha recently.
“The Reserve Bank of India (RBI) closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band,” Sitharaman said in response to a question about whether the RBI has been using foreign exchange reserves to stem the fall in the Indian currency.