India’s forex reserves dip by $2.47 billion, records 5th straight weekly fall

India's foreign exchange (forex) reserves dipped by $2.47 billion in the week ended April 8, registering the fifth straight week of fall, as the Reserve Bank of India (RBI) appears to keep selling dollars to prevent a slide in the value of rupee amid high import bills for petroleum products, according to news agency ANI report.

As per the RBI's weekly statistical supplement, India's forex reserves fell by $2.471 billion to $604.004 billion for the week ended April 8. This makes it the fifth straight week of fall in the country's forex reserves. In the last five weeks under review, the country's forex reserves have declined by $28.5 billion.

This week's drop comes following the drop in forex reserves by $11.17 billion in the week ended April 1, which was the steepest weekly fall ever. Additionally, the country's forex reserves have declined sharply after touching an all-time high of $642.453 billion on September 3, 2021. This was the fourth consecutive week of decline in the country's forex reserves as the RBI continued to intervene in the currency markets by way of dollar sales to prevent a slide in the value of the rupee amid the Russia-Ukraine conflict.

A sharp fall in foreign currency assets

The current slump in the forex reserves has been largely due to the sharp fall in foreign currency assets. India's foreign currency assets dipped by $2.082 billion to $537.645 billion during the week ended April 8. The foreign currency assets had slumped by $10.727 billion in the previous week.

The foreign currency asset is the biggest component of the forex reserves. Expressed in US dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-dollar currencies like Euro, UK's Pound Sterling and Japanese Yen held in the foreign exchange reserves.

Meanwhile, the value of gold reserves dipped by $215 million to $42.519 billion during the week under review. It had dropped by $507 million during the week ended April 1.

The other two components of the forex reserves also declined. The value of India's Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) fell by $141 million to $18.738 billion. India's reserve position in the IMF fell by $34 million to $5.101 billion during the week ended April 8, the RBI data showed.

(With inputs from agencies)