India's forex reserves fall by $8.09B to $688.894B
What's the story
India's foreign exchange reserves have witnessed a major decline, falling by $8.094 billion to settle at $688.894 billion for the week ending May 15, data from the Reserve Bank of India (RBI) revealed. The fall comes after a rise of $6.295 billion in the previous week, taking the total to $696.988 billion for the week ending May 8.
Volatility
Middle East conflict has triggered volatility
India's forex reserves had hit a record high of $728.494 billion for the week ending February 27 this year. However, the ongoing Middle East conflict has triggered volatility, putting pressure on the rupee and forcing RBI to intervene in the foreign exchange market through dollar sales. Prime Minister Narendra Modi has since May 11 urged citizens to conserve foreign exchange by cutting down on non-essential foreign travel, fuel consumption, and gold purchases for a year.
Reserve components
Foreign currency assets fell by $6.483B
The RBI data shows that foreign currency assets, a major component of forex reserves, fell by $6.483 billion to $545.904 billion during the reporting week. These assets are expressed in dollar terms and include the impact of appreciation or depreciation of non-US currencies like euro, pound, and yen held in reserves. Gold reserves also fell by $1.536 billion to $119.317 billion during this period.
Additional declines
SDRs with IMF also fell
Along with the fall in foreign currency assets and gold reserves, India's Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) also fell by $49 million to $18.824 billion. The reserve position with the IMF also slipped by $25 million to $4.85 billion during this period, according to RBI data.