According to the RBI, the country’s forex reserves declined by USD 2.795 billion to USD 616.143 billion in the week ending January 19, 2023. The reduction is due to rising import costs and RBI market order intervention. Gold reserves fell USD 34 million.
India’s foreign exchange reserves fell by USD 2.795 billion to USD 616.143 billion in the week ending January 19, 2023, according to the Reserve Bank of India (RBI) data. The central bank’s weekly statistical data showed that India’s foreign currency assets (FCA), the largest component of FX reserves, fell by USD 2.653 billion to USD 545.855 billion.
Gold reserves fell 34 million to 47.212 billion this week. The RBI added USD 58 billion to its foreign exchange reserves in 2023. India lost USD 71 billion in forex in 2022. Central banks and monetary authorities hold forex reserves (FX reserves).
It is held in reserve currencies including the US Dollar, Euro, Japanese Yen, and Pound Sterling. The country’s foreign exchange reserves peaked at USD 645 billion in October 2021. Due to a 2022 import price increase, much of the drop since then has been minimal. The RBI’s occasional market intervention to safeguard the rupee’s uneven depreciation against a rising US dollar may also explain the relative loss in FX reserves.
To prevent a sharp rupee depreciation, the RBI occasionally intervenes in the market through liquidity management, including dollar sales. The RBI closely monitors foreign exchange markets and intervenes only to limit exchange rate volatility without a target level or band.
Conclusion
India’s foreign exchange reserves fell by USD 2.795 billion to USD 616.143 billion in the week ending January 19, 2023, according to the RBI. The RBI intervened to protect the rupee against a rising US dollar in 2022, lowering import prices. Gold reserves fell USD 34 million to USD 47.212 billion. The RBI adds USD 58 billion to its foreign exchange kitty in 2023 and loses USD 71 billion in 2022.
