India's foreign exchange reserves fall, first decrease in eight weeks

India's foreign exchange reserves fell for the first time in eight weeks and fell from its record high of $701.18 billion on October 4. According to RBI data released on Friday, the reserves fell by $3.71 billion this week, while it had increased by about $35 billion in the previous seven weeks.

Foreign exchange reserves rose to a record high of $704.89 billion at the end of the week and rose by $12.6 billion in the week ended September 27, the biggest weekly increase since mid-July 2023.

What is the reason?

Let us tell you that the change in foreign exchange reserves is due to RBI's intervention in the foreign exchange market, as well as it also has the effect of fluctuations in the prices of foreign assets. RBI intervenes on both sides of the market to avoid excessive volatility in the rupee. 

Foreign exchange reserves also include India's reserve tranche position in the International Monetary Fund. During the time period for which these figures have been released, the rupee saw its worst week since May, in which it fell 0.3% week-on-week. 

The reason for this decline was the outflow of money from the equity market and the rise in crude oil prices due to increasing tensions in the Middle East country.

According to traders, the RBI intervened in non-deliverable forwards and the local spot foreign exchange market to keep the rupee above the crucial 84 level. On Friday, the rupee closed at 84.06, while it had hit a record low of 84.07 in intraday trade.

Gold Reserve of India

According to RBI data till September, a strong increase was seen in India's gold reserve. With an increase of $ 2.18 billion in the gold reserve, its total value became $ 65.79 billion. 

Let us tell you that the gold deposited in the bank is called gold reserve, which is deposited to support the Indian currency. Through this, any country keeps its economy stable.