According to data released by the Reserve Bank of India (RBI) on February 23, India’s foreign exchange reserves decreased to $616.10 billion as of February 16.
This figure represents a decline of $1.13 billion from the previous week. However, it follows a larger decrease of $5.24 billion in the week ending February 9, making the current reserves the lowest in two months. The last time reserves were lower was on December 15, when they stood at $615.97 billion.
As of February 16, the composition of the forex reserves is as follows:
- Foreign currency assets: $545.78 billion, down $740 million from the previous week
- Gold: $47.38 billion, down $362 million from the previous week
- Special Drawing Rights: $18.11 billion, down $28 million from the previous week
- Reserve position in the International Monetary Fund: $4.83 billion, down $1 million from the previous week
Changes in forex reserves occur due to the sale or purchase of foreign assets and fluctuations in currency values. The RBI’s approach is to intervene in the market only to prevent excessive volatility in the rupee’s exchange rate. Despite the recent decline, the reserves remain close to their all-time high of $642.45 billion, reached in September 2021.
RBI Governor Shaktikanta Das expressed confidence in India’s external sector resilience on February 8, stating, “Vulnerability indicators suggest greater resilience of India’s external sector. We are confident of comfortably meeting all our external financing requirements.”
Forex reserves are expected to increase in the coming months, particularly after the listing of Indian government bonds on JPMorgan’s global indices starting in June. Economists anticipate over $20 billion in foreign funds entering Indian sovereign debt over a 10-month period, which the RBI is likely to absorb to prevent excessive rupee appreciation, thus adding to its reserves.
