India added USD 58 billion to its foreign exchange reserves in December 2023, a 21-month high. RBI increased foreign currency assets to $549.747 billion. RBI intervention and increased import costs reduced forex reserves.
In the week ending December 22, 2023, India’s foreign exchange reserves reached a 21-month high of USD 620.441 billion, according to the Reserve Bank of India. USD 58 billion was added to RBI foreign exchange reserves in 2023.
According to the central bank’s monthly statistics data, India’s foreign currency assets (FCA), the largest component of FX reserves, rose USD 4.698 billion to USD 549.747 billion last week.
India lost USD 71 billion in currency in 2022. Over the week, gold reserves declined USD 102 million to USD 474.74 billion.
Central banks and monetary authorities keep FX reserves. Reserve currencies include the US Dollar, Euro, Japanese Yen, and Pound Sterling.
India’s foreign exchange reserves grew 9.112 billion to USD 615.971 billion before December 15. The country’s forex reserves peaked at $645 billion in October 2021.
A 2022 import price hike has minimized the decrease since then. The RBI’s market operations to protect the rupee’s depreciation against a rising US currency also reduced foreign reserves.
To avert a significant rupee depreciation, the RBI sometimes sells dollars via liquidity management.The RBI carefully monitors foreign currency markets and intervenes only to reduce volatility without a target or range.
Conclusion
The Reserve Bank of India reported a 21-month high in Indian foreign currency reserves in the week ending December 22, 2023. RBI foreign forex contributions were USD 58 billion in 2023. Foreign currency assets, the main part of FX reserves, rose USD 4.698 billion to USD 549.747 billion. India lost USD 71 billion in 2022 currency reserves. Due to growing import costs and RBI action to protect the rupee against the US dollar, forex reserves decreased.
