India's foreign exchange reserves declined by $7.794 billion to $690.693 billion during the week ended May 1, according to data released by the Reserve Bank of India (RBI) on Friday. This follows a drop of $4.82 billion in the previous reporting week ended April 24, when the overall forex kitty stood at $698.487 billion.
Forex Reserves Decline Amid Rupee Pressure
The country's forex reserves had touched an all-time high of $728.494 billion during the week ended February 27, before the outbreak of the Middle East conflict. The geopolitical tensions exerted pressure on the rupee, prompting the RBI to intervene in the foreign exchange market through dollar sales, which led to a depletion of reserves.
Foreign Currency Assets Fall
RBI data showed that foreign currency assets (FCAs), the largest component of the reserves, fell by $2.797 billion to $551.825 billion during the reporting week. Expressed in dollar terms, FCAs include the impact of appreciation or depreciation in non-US currencies such as the euro, pound, and yen held in the reserves.
Gold Reserves See Sharp Decline
Gold reserves also experienced a significant drop during the week. Their value decreased by $5.021 billion to $115.216 billion, as per the central bank's data.
SDRs and IMF Position Rise Marginally
Meanwhile, Special Drawing Rights (SDRs) with the International Monetary Fund rose by $15 million to $18.789 billion during the week. India's reserve position with the IMF also increased slightly by $8 million to $4.863 billion, according to the RBI data.
The decline in reserves reflects the central bank's efforts to stabilize the rupee amid global economic uncertainties and geopolitical tensions.
