According to Reserve Bank of India data, India’s foreign exchange reserves increased by USD 4.532 billion to USD 588.780 billion on a weekly basis as of April 28.
Foreign exchange reserves declined by USD 2.16 billion during the previous week, ending on April 21, to USD 584.24 billion. They increased by USD 1.657 billion to USD 586.412 billion in the week ending April 14, a level not seen in more than nine months.
Returning to the latest RBI data, India’s foreign currency assets, the largest component of FX reserves, increased by USD 4.996 billion to USD 519.485 billion.
During the most recent week, gold reserves declined by USD 494 million to USD 45.657 billion.
The country’s foreign exchange reserves reached an all-time high of over USD 645 billion in October 2021.
Much of the drop can be ascribed to the RBI’s recent intervention as well as an increase in the cost of imported items.
Furthermore, the RBI’s intervention in the market to defend the weakening rupee against a surging US dollar had reduced forex reserves significantly.
Typically, the RBI will interfere in the market from time to time through liquidity management, including the sale of dollars, in order to prevent a sharp depreciation of the rupee.
The RBI regularly monitors foreign exchange markets and intervenes only to ensure orderly market conditions by reducing excessive volatility in the exchange rate, without regard for any predetermined target level or band.