India’s foreign exchange (forex) reserves dipped by $2.03 billion in the week ending March 25, recording a sharp drop for the third consecutive week, as the Reserve Bank of India (RBI) intervened in the currency markets by way of dollar sales to prevent a slide in the value of rupee amid the Russia-Ukraine conflict.
According to the RBI’s weekly statistical supplement, the country’s forex reserves dipped by $2.03 billion to $617.648 billion during the week ending March 25.
This is the third consecutive weekly fall in the country’s forex reserves. The forex reserves had slipped by $2.597 billion and $9.646 billion in the previous two weeks, respectively.
In the last three weeks for which the data is available the country’s forex reserves have slumped by nearly $15 billion.
For the week ending March 11, India’s forex reserves had slumped by $9.646 billion, the sharpest decline in nearly two years. The decline in the country’s forex reserves coincides with the week during which the rupee hit an all-time low. The Indian rupee plunged to a record low of 77.02 against a US dollar on March 7.
For the week ending March 18, the forex reserves had dipped by $2.59 billion.
The forex reserves have slumped mainly due to a sharp drop in foreign currency assets.
The foreign currency asset, which is the biggest component of the forex reserves, slumped by $3.202 billion to $550.454 billion during the week ending March 25. The foreign currency assets had slumped by $11.108 billion in the week ending March 11 and again by $703 million in the week ending March 18.
Expressed in US dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-dollar currencies like Euro, UK’s Pound Sterling and Japanese Yen held in the foreign exchange reserves.
The value of India’s Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) declined by $44 million to $18.821 billion. India’s reserve position in the IMF declined by $14 million to $5.132 billion during the week ending March 25, the RBI data showed.
However, the value of gold reserves rose by $1.23 billion to $43.241 billion during the week under review.