Forex reserves down by $6 bn to $593.45 bn

India’s forex reserves fell by $6.1 billion to $593.45 billion in the week ending May 19, the biggest weekly drop since February 10. The decline was due to the central bank’s foreign currency assets decreasing by $4.7 billion to $524.95 billion. 

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The country’s foreign exchange reserves dropped by $6.1 billion to $593.5 billion during the week ended May 19, the RBI said on Friday.

Gold reserves at the RBI also dropped by $1.3 billion to $45.13 billion. The central bank’s reserves had also declined by $8.3 billion in the week ended February 10. 

The Indian rupee experienced a 0.8% decline against the US dollar due to the impact of a weakening Chinese yuan and concerns about a US debt default. This resulted in the rupee’s poorest performance in nine weeks, occurring between May 15 and May 19.

The forex kitty reached an all-time high of $645 billion in October 2021. The forex reserves have been decreasing as the central bank uses them to protect the rupee from pressures mainly caused by global events. Foreign currency assets also consider the impact of appreciation or depreciation of non-US units.

According to research analyst Dilip Parmar from HDFC Securities, “The RBI might have intervened by supplying dollars during the week ended May 19, as the rupee tumbled more than a percentage point in the previous two weeks following weakness in the Chinese yuan and the US Debt ceiling issue.”