India’s forex reserves continue to drop; Rupee nears all-time low

Mumbai: India’s foreign exchange (forex) reserves dipped by $2.695 billion to $597.728 billion for the week that ended on April 29. It appears that the Reserve Bank of India (RBI) is selling dollars to prevent a slide in the value of the rupee amid the ongoing Russia-Ukraine conflict and other geopolitical uncertainties.

On the other hand, the rupee reached a level of Rs. 76.93 per dollar. It is near to all-time low of Rs. 76.97 per dollar which was recorded in March.

India’s forex reserves

As per the RBI’s weekly statistical supplement, all components of the forex reserves declined during the week under review.

This is the eighth straight week of fall in the country’s forex reserves. India’s forex reserves have fallen sharply after touching an all-time high of $642.453 billion on September 3, 2021.

India’s foreign currency assets, which are the biggest component of the forex reserves, dipped by $1.110 billion to $532.823 billion during the week ended April 29.

The value of gold reserves fell by $1.164 billion to $41.604 billion. The value of India’s Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) fell by $0.362 billion to $18.299 billion.
India’s reserve position in the IMF dropped by $59 million to $5.001 billion.

What is India’s forex reserve?

It consists of the following four categories:

1. Foreign currency
2. Gold
3. Special Drawing Rights (SDR)
4. Reverse Tranche Position (RTP)

Out of the above four categories, the major chunk is of foreign currency assets. It is followed by Gold, SDR, and RTP.

Forex reserves in other countries

Currently, China tops the list of five countries whose forex reserves are more than 590 billion. India is in the fourth position on the list.

Following is the list of the top five countries and their forex reserves:

1. China (3373.159 billion)
2. Japan (1356.071 billion)
3. Switzerland (1101.380 billion)
4. India (597.728 billion)
5. Russia (593.1 billion)