India’s foreign exchange reserves have plummeted by $1.7 billion, reaching a one-year low

According to Reserve Bank of India (RBI) data released on Friday, India’s forex reserves fell by USD 1.774 billion to USD 595.954 billion for the week ended May 6 due to a drop in core currency assets.

Overall reserves fell by USD 2.695 billion to USD 597.728 billion in the preceding reporting week, dropping below the USD 600 billion level.

RBI is apparently intervening across all markets to defend the rupee, which is under pressure due to large outflows by foreign investors. In the six months leading up to March 2022, foreign exchange reserves fell by USD 28.05 billion.

According to RBI’s weekly data, the loss in reserves was due to a drop in Foreign Currency Assets (FCA), a major component of overall reserves, and gold reserves during the reporting week.

In the week ending May 6, FCA fell by USD 1.968 billion to USD 530.855 billion. The effect of appreciation or depreciation of non-US units held in foreign exchange reserves, such as the euro, pound, and yen, is included in the foreign currency assets when expressed in dollar terms.

The data showed that gold reserves climbed by USD 135 million to USD 41.739 billion in the reporting week. The International Monetary Fund’s (IMF) Special Drawing Rights (SDRs) increased by USD 70 million to USD 18.370 billion.

According to the data, the country’s reserve position with the IMF fell by USD 11 million to USD 4.99 billion in the reporting week.

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