Indian forex reserves decline $4.3 billion to $589bn

New Delhi: India's overall foreign exchange reserves declined from $4.339 billion to $589.138 billion in the week that ended on May 26, 2023, data released by Reserve Bank of India on Friday showed.

A week ago, the foreign exchange reserves declined by $6.05 billion to $593.477 billion. India's foreign currency assets, the biggest component of the forex reserves, declined by $4.014 billion to $520.931 billion, the latest data showed.

Gold reserves during the latest week declined by $225 million to $44.902 billion.
In October 2021, the country's foreign exchange reserves touched an all-time high of about $645 billion.

Much of the decline since then can be attributed to a rise in the cost of imported goods in 2022.

Also, the forex reserves had fallen 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.