India’s foreign exchange reserves experienced a notable decrease of $4.8 billion, totaling $670.12 billion for the week ending August 9, according to data released by the Reserve Bank of India (RBI) on Friday, August 16. This decline comes after reserves had peaked at an all-time high of $675 billion as of August 2, reflecting strong performance in the external sector.
The Weekly Statistical Supplement from the RBI indicates that Foreign Currency Assets (FCAs) fell by $4.079 billion, settling at $587.9 billion. FCAs, expressed in dollar terms, include the impact of fluctuations in the value of non-US currencies such as the euro, pound, and yen.
Gold reserves also decreased by $860 million, bringing the total to $59.23 billion. On the other hand, Special Drawing Rights (SDRs) increased by $121 million, reaching $18.28 billion for the week. Additionally, the reserve position in the International Monetary Fund (IMF) rose by $18 million to $4.63 billion.
The RBI periodically engages in market interventions to manage liquidity, including the sale of dollars, to prevent a sharp depreciation of the rupee. The central bank monitors foreign exchange markets closely and intervenes as needed to ensure market stability and reduce excessive volatility in the exchange rate, without aiming for any specific target level or band.
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