Priyanka
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India’s foreign exchange reserves took a hit last week as the falling rupee against the dollar impacted the overall balance. Here’s a breakdown of what happened:
Decline in Forex Reserves
India:
The country’s forex reserves dropped by $2.54 billion to $635.72 billion for the week ending February 14. This decline comes after a previous week when the reserves had risen by $7.65 billion to $638.26 billion. The recent drop is largely due to the Reserve Bank of India’s (RBI) efforts in the foreign exchange market aimed at reducing rupee volatility.
Pakistan:
In contrast, Pakistan saw a modest increase in its foreign exchange reserves by $121.3 million during the same period.
Record High and Subsequent Drop
Peak in 2024:
India’s forex reserves had reached an all-time high of $704.885 billion at the end of September 2024. However, RBI interventions to manage rupee fluctuations have contributed to the decline from that peak.
Foreign Exchange Assets:
A significant portion of India’s reserves—its foreign exchange assets, which are denominated in various currencies like the euro, pound, and yen—fell by $4.51 billion to $539.59 billion in the week ending February 14.
Positive Movements in Other Reserves
Gold Reserves:
On a positive note, the value of gold reserves increased by $1.94 billion, reaching $74.15 billion during the week.
Special Drawing Rights (SDR) and IMF Reserves:
SDRs saw a slight boost, rising by $19 million to $17.89 billion. Additionally, India’s reserve with the International Monetary Fund (IMF) grew by $14 million to $4.08 billion.
Overall, while India’s forex reserves are facing downward pressure due to market interventions, certain areas like gold and international reserves are showing strength.
