India's Forex Reserves now Totalling $586 Billion

The Reserve Bank of India (RBI) reported on Nov 3 that India's foreign exchange reserves increased by $2.6 billion to $586.5 billion for the week ending October 27. Previously, forex reserves fell by $2.36 billion for the week ending October 20, bringing the total to $583.5 billion. According to the RBI's Weekly Statistical Supplement, foreign currency assets (FCAs) increased by $2.3 billion to $517.5 billion.

The FCAs are expressed in dollars and include the effect of non-US currency appreciation or depreciation in foreign exchange reserves such as the euro, pound, and yen. Gold reserves rose $ 0.49 billion to $45.9 billion, while SDRs fell $15 million to $17.91 billion. The IMF's reserve position has shrunk by by $0.208 billion to $4.77 billion.

It should be noted that the country's forex reserves reached an all-time high of USD 645 billion in October 2021. The reserves have been declining as the central bank uses the funds to defend the rupee against pressures brought on primarily by global events.

Typically, the RBI will intervene 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 closely monitors foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without regard for any predetermined target level or band.