India’s foreign exchange (forex) reserves dropped by $2.901 billion to $593.198 billion in the week ended June 23, according to the Reserve Bank of India data published on Friday. In the previous reporting week, the overall reserves had increased by $2.35 billion, reaching $596 billion.
According to the Weekly Statistical Supplement released by the RBI, for the week ended June 23, the foreign currency assets, a major component of the reserves, declined by $2.212 billion to $525.44 billion.
These foreign currency assets are valued in dollars and take into account the impact of changes in value for currencies such as the euro, pound, and yen held in the foreign exchange reserves. Foreign Currency Assets (FCAs) are held in diverse currencies like the US dollar, Euro, pound sterling, Australian dollar, etc.
The country’s reserves of foreign currency hit an all-time high of $645 billion in October 2021. The reserves have been decreasing as the central bank has utilised its funds to support the rupee against pressure from international events.
During the reporting week, Gold reserves declined by $745 million to $44.304 billion, as per the RBI data. On the other hand, the Special Drawing Rights (SDRs) were up by $85 million to $18.334 billion.
The country’s reserve position with the IMF was down by $29 million to $5.12 billion in the reporting week, the apex bank data showed.
Forex reserves are essential assets maintained in foreign currencies by the central bank. They frequently support the exchange rate and have an impact on monetary policy. The RBI intervenes in the spot and forwards markets to stop the rupee from making unpredictable movements that have an impact on the overall reserves position. Forex changes also occur from valuation gains or losses.
Also Read: New Record At Stock Market: Sensex Jumps 803 Points, Nifty Settles Around 19,200. All Sectors In The Green
Meanwhile, on Friday, the key equity benchmarks, Sensex and Nifty settled at record highs for the second straight trading session on the back of all-round buying. The S&P BSE Sensex, which started the day with a 100-odd point gap-up, went on to extend gains as the day progressed. The Sensex scaled a high of 64,768.58 towards the fag end of the trading session and finally ended with a solid gain of 803 points at 64,719.
On the other hand, the rupee closed flat at 82.03 (provisional) against the US dollar in a restricted trade on Friday amid a rally in the domestic equities and firm crude oil prices. While FII inflows into equities supported the rupee, a firm US dollar in global markets and gains in crude oil prices capped its gains, analysts said.