India's forex reserves dip by $1.3bn in first week of 2023

Mumbai: India's foreign exchange reserves fell by $1.268 billion to $561.583 billion in the week ending on January 6, Reserve Bank of India's Bulletin Weekly Statistical Supplement data showed.

During the week that ended on December 30, the country's forex reserves were at $562.851 billion, earlier data showed. According to RBI's latest data, India's foreign currency assets, the biggest component of the forex reserves, declined by $1.747 billion to $496,441 billion.

Gold reserves, however, rose by $461 million to $41.784 billion.

At the start of 2022, the overall forex reserves were at about $633 billion. Much of the decline can be attributed to RBI's intervention and a rise in the cost of imported goods in recent times.

In October 2021, the country's foreign exchange reserves reportedly touched an all-time high of about $645 billion.

The forex reserves had been intermittently falling for months now largely because of the RBI's intervention in the market to defend the depreciating rupee against a surging US dollar.

Typically, the RBI, from time to time, intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.

The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band, Union Finance Minister Nirmala Sitharaman had said in response to a question in recent Parliament session on whether the central bank has been using reserves to stem the fall in the Indian currency.