The nation's foreign exchange reserves reached a record high of over USD 645 billion in October 2021.
Digital Desk: The Reserve Bank of India issued its most recent data for the week ending January 19, 2023, and it showed that India's foreign exchange reserves decreased by USD 2.795 billion to USD 616.143 billion.
As per the central bank's weekly statistics data, India's foreign currency assets (FCA), which constitute the largest part of the FX reserves, experienced a loss of USD 2.653 billion during the week, coming to USD 545.855 billion. During the week, gold reserves dropped to USD 47.212 billion, a decrease of USD 34 million.
Approximately USD 58 billion was added to the RBI's foreign exchange reserves in 2023. India's foreign exchange reserves declined by a total of USD 71 billion in 2022. Foreign exchange reserves, often known as forex reserves or FX reserves, are assets owned by a country's central bank or other monetary authority. The US dollar is typically used as a reserve currency, with smaller amounts maintained in the Euro, Japanese yen, and pound sterling.
The nation's foreign exchange reserves reached a record high of over USD 645 billion in October 2021.
A significant portion of the decrease that has occurred since then, if marginally so overall, can be linked to an increase in the price of imported goods in 2022.
Additionally, the relative decline in foreign exchange reserves may be related to the RBI's periodic market intervention intended to protect the rupee's uneven depreciation versus the strengthening US dollar.
Generally, to keep the rupee from depreciating sharply, the RBI occasionally manages market liquidity by selling dollars, among other instruments.
With no reference to any pre-established target level or band, the RBI solely intervenes to ensure orderly market conditions by reducing excessive volatility in the currency rate. The RBI carefully monitors the foreign exchange markets.
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