Forex Reserves Decline for Sixth Consecutive Week, Reaching $625.87 Billion

The Reserve Bank of India (RBI) reported a significant decrease in India's foreign exchange reserves, which have now fallen for the sixth consecutive week. As of January 10, these reserves stand at $625.87 billion, marking a 10-month low.

Factors Behind the Decline

The recent drop in forex reserves can be linked to aggressive interventions by the central bank in the currency market. This intervention is aimed at supporting the Indian rupee, which has been under pressure due to the strength of the US dollar.

In the latest week, the reserves decreased by $8.7 billion from the previous week's total of $634.59 billion. The RBI's data indicates that the decline in overall reserves is indicative of the ongoing challenges faced in the currency market.

Impact on Currency and Market

The Indian rupee has weakened against the US dollar for two consecutive days, a trend that reflects the rebound of the dollar index. On Friday, the rupee closed at 86.61 against the dollar, which was a depreciation of six paise from the previous day.

For the week ending January 10, the foreign currency assets, which are a crucial component of the total reserves, fell to $536.01 billion, down from $545.48 billion in the earlier week. This fluctuation in foreign currency assets highlights the impact of global currency movements, including the appreciation or depreciation of currencies like the euro, pound, and yen.

Gold Reserves Show Slight Increase

On a more positive note, gold reserves have seen a rise, increasing from $67.09 billion to $67.88 billion during that same period. This increase may serve as a buffer against the fluctuating dollar reserves and provide some stability to the overall forex situation.

The decline in forex reserves and the performance of the rupee against the dollar are critical points of observation for market analysts and economists alike. Ongoing monitoring will be essential to understand how these factors influence future economic conditions.

Forex, Reserves, India