India’s foreign exchange reserves experienced a decline of $2.79 billion, reaching $616.14 billion for the week ending on January 19, according to the most recent data released by the Reserve Bank of India (RBI) on Friday.

The previous week had witnessed an increase in forex reserves by $1.6 billion, pushing the total to $618.94 billion for the week ending on January 12, 2024.

In line with the Weekly Statistical Supplement provided by RBI, Foreign currency assets (FCAs) saw a decrease of $2.6 billion amounting to $545.8 billion. The FCAs are measured in dollar terms and account for fluctuations in non-US units such as the euro, pound, and yen held within India’s foreign exchange reserves.

Additionally, gold reserves exhibited a decrease of $34 million down to $47.2 billion while Special Drawing Rights (SDRs) dropped by $476 million resulting in a total of $18.2 billion.

Meanwhile, India’s reserve position in the International Monetary Fund (IMF) diminished by $18 million settling at $4.85 billion during this period.

In October 2021, India’s forex kitty reached its peak at USD 645 billion; however since then it has been witnessing a gradual decline as RBI utilizes these funds to stabilize the rupee amid pressures arising from global developments.

To prevent sharp depreciation of the rupee due to excessive volatility in exchange rates caused by various factors including global market trends, RBI intervenes proactively through liquidity management strategies like selling dollars at suitable times without adhering to any fixed target level or band.

The central bank closely oversees foreign exchange markets and intervenes strategically solely for maintaining orderly market conditions thereby ensuring stability while dealing with currency fluctuation challenges effectively.