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India's foreign exchange reserves (forex) slumped USD 1.237 billion to USD 691.485 billion in the week ending May 30, official data released by the Reserve Bank of India showed on Friday.
RBI Governor Sanjay Malhotra said the foreign exchange kitty is sufficient to meet 11 months of the country's imports and about 96 per cent of external debt, announcing the outcome of the Monetary Policy Committee (MPC) decisions earlier today. The RBI governor added, "Overall, India's external sector remains resilient as key external sector vulnerability indicators continue to improve. We remain confident of meeting our external financing requirements." Despite the marginal weekly decline, the forex kitty is close to its all-time high of USD 704.89 billion in September 2024. The latest RBI data showed that India's foreign currency assets (FCA), the largest component of foreign exchange reserves, stood at USD 584.215 billion. According to RBI data, the gold reserves currently amount to USD 84.305 billion. Central banks worldwide increasingly accumulate safe-haven gold in their foreign exchange reserves kitty, and India is no exception. The share of gold maintained by the Reserve Bank of India (RBI) in its foreign exchange reserves has almost doubled since 2021. In 2023, India added around USD 58 billion to its foreign exchange reserves, contrasting with a cumulative decline of USD 71 billion in 2022. In 2024, the reserves rose by a little over USD 20 billion. Foreign exchange reserves, or FX reserves, are assets held by a nation's central bank or monetary authority, primarily in reserve currencies such as the US Dollar, with smaller portions in the Euro, Japanese Yen, and Pound Sterling. The RBI often intervenes by managing liquidity, including selling dollars, to prevent steep Rupee depreciation. The RBI strategically buys dollars when the Rupee is strong and sells when it weakens. (ANI)
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