India’s forex reserves drop for sixth week by USD 6.477 billion
The forex reserves had dropped by $2.675 billion to $682.13 billion in the previous reporting week.
India’s forex reserves fell by $3.007 billion to $561.046 billion in the week ending August 26, according to the latest data released by the Reserve Bank of India (RBI).
This is the second consecutive week when foreign exchange reserves have fallen. In the previous week ended August 19, it slumped by USD 6.687 billion to USD 564.053 billion.
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The fall in India’s forex reserves was mainly attributed to fall in foreign currency assets (FCA). It is considered one of the major reserves of the overall reserves, and gold reserves. FCA fell by $2.571 billion to $498.645 billion during the reporting week.
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Gold reserves have also shown a dip. It decreased by $271 million to $39.643 billion, the data revealed.
The Special Drawing Rights (SDRs) dropped by $155 million to $17.832 billion.
India’s forex reserves position with the IMF also dipped by $10 million to $4.926 billion in the reporting week, the data showed.
According to Statista, a research website, China has the largest forex reserves. India holds the world’s fourth highest number foreign reserves.
Foreign reserves are maintained by a country’s central bank which checks the balance of payments, and maintains financial market stability.
Forex reserves mainly consists of four components. It includes foreign currency assets, gold, special drawing rights and the reserve position in the International Monetary Fund.
The fall in reserves may weaken the currency and negatively affect the currency’s exchange rate. On the other hand, a high reserve is boon in the time of a country’s crisis. It also help rupee strengthen against dollar.
(with inputs from IANS)
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