India’s foreign exchange (forex) reserves declined $2.471 billion to stand at $604.004 billion in the week ended April 8.
Ever since the Russia-Ukraine war began in late February, the reserves have been falling due to RBI reportedly intervening to reduce volatility in the Rupee and returns from investments coming down due to rising yields of sovereign bonds issued by advanced economies.
The reserves had touched an all-time high of $642.453 billion on September 3, 2021.
On April 8, RBI Governor Shaktikanta Das emphasised that: ”Overall, our external sector indicators remain healthy and have improved significantly in recent years. Our foreign exchange reserves stand at US$ 606.5 billion as on April 1, 2022 which are further bolstered by the net forward assets of the RBI.
“The Reserve Bank remains committed to maintain orderly conditions in the domestic financial markets and will take appropriate steps, as needed, on an ongoing basis to contain the adverse spillovers from the global developments.”
In the reporting week, foreign currency assets (FCAs) fell by $2.082 billion. FCAs comprise multi-currency assets (securities, deposits with other central banks & BIS, and deposits with commercial banks overseas) that are held in multi-asset portfolios.
The other three components of the forex reserves also declined — gold (by $215 million); Special Drawing Rights ($141 million) and Reserve Position in the IMF ($34 million).