Forex Kitty Increases for the Second Week in a Row, Gaining $1.73 Billion to $573.7 Billion
Based on the most recent RBI data, India’s foreign exchange reserves climbed by $1.727 billion to $573.727 billion during the week ending January 20. This is the second time this season that the pot has increased, following the $10.417 billion increase to $ 572 billion the week before.
The nation’s foreign exchange reserves hit an all-time peak of $645 billion in October 2021. The holdings have been dropping as the reserve bank uses its funds to safeguard the rupee against pressures mostly brought on by international events. The reserves had increased by $14.721 billion over a week in October 2022.
By the Weekly Statistical Supplement provided by the RBI on Friday, the foreign cash assets, a significant part of the reservoirs, climbed by $839 million to $506.358 billion over the recording week. The value of the increases or decreases of non-US currencies like the euro, pound, and yen kept in forex reserves is included in the foreign currency assets, presented in dollar terms.
According to the RBI, the value of gold increased further, rising by $821 million to $43.712 billion. According to the central bank, the Special Drawing Rights (SDRs) increased by $68 million to $18.432 billion. According to data from the apex bank, the nation’s reserve status with the IMF decreased by $1 million to $5.226 billion during the assessment week.
Reason for Rupee Depreciation
Due to the RBI’s involvement in the major currencies to reduce volatility and support the rupee, the currency exchange reserves decreased in 2022. Nirmala Sitharaman, the Union finance minister, had earlier stated in the Lok Sabha that the RBI had liquidated $33.42 billion in net assets through September. The rise of the dollar, shareholders’ risk aversion, and the expansion of geopolitical threats as a result of the Ukraine conflict were the main causes of the rupee’s depreciation in 2022.