India’s forex reserves dip $3.7 bn to come off all-time record high

After hitting a record high last week, India’s forex reserves contracted by $3.7 billion to $701.18 billion as of October 4, data shared by the Reserve Bank of India showed on Friday.

According to the Weekly Statistical Supplement released by the RBI, Foreign currency assets (FCAs) dipped by $3.51 billion to $612.6 billion. Expressed in dollar terms, the FCAs include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.

Gold reserves decreased by $40 million to $65.76 billion. SDRs also saw a marginal dip by $123 million to stand at $18.43 billion. Reserve position in the IMF contracted by $35 million to $4.35 billion.

The RBI, from time to time, intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.

The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band.