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India’s Foreign Exchange Reserves Drop to $640.27 Billion: A Closer Look

In a recent update from the Reserve Bank of India (RBI) on Friday, it was reported that India’s foreign exchange reserves took a significant hit, decreasing by $4.112 billion to $640.279 billion for the week ending December 27. This decline comes on the heels of a previous drop of $8.478 billion, bringing the total to $644.391 billion for the week ending December 20.

## Reasons Behind the Decline

The recent weeks have shown a consistent downward trend in reserves, primarily attributed to revaluation and RBI’s interventions in the forex market to stabilize rupee fluctuations. The reserves had previously peaked at $704.885 billion towards the end of September.

## Breakdown of Assets

According to the data released, foreign currency assets, which make up a substantial portion of the reserves, saw a decline of $4.641 billion to $551.921 billion for the week ending December 27. These assets, when converted to dollar terms, reflect the impact of value changes in non-US currencies like the euro, pound, and yen held within the foreign exchange reserves.

During this period, there was a slight increase in gold reserves, rising by $541 million to $66.268 billion. However, Special Drawing Rights (SDRs) took a hit, decreasing by $12 million to $17.873 billion.

## IMF Reserve Position

The RBI’s data also revealed that India’s reserve position with the International Monetary Fund (IMF) remained steady at $4.217 billion during the reporting week.

As we delve into the complexities of India’s foreign exchange reserves, it becomes clear that various factors contribute to the fluctuations in these assets. From currency revaluations to market interventions, each element plays a crucial role in shaping the country’s financial landscape. It’s essential for policymakers and stakeholders to closely monitor these developments to ensure stability and resilience in the face of economic challenges.