India's foreign exchange reserves decline to 5-month low of $654.8 billion

India’s foreign exchange reserves dropped by $3.235 billion to $654.857 billion, a five-month low, for the week ended December 6, data released by the Reserve Bank of India (RBI) revealed on Friday.

 

The RBI is expected to have sold net dollars worth $61.1 billion to protect the domestic currency, but there was a revaluation gain, which resulted in the forex reserves falling by a little over $3 billion, said an economist.

 

The domestic currency depreciated to a new low of Rs 84.88 per dollar on Thursday but settled at 84.87. On Friday, the domestic currency closed at 84.80 against the dollar.

 

In the previous reporting week, the reserves had risen by $1.51 billion to $658.091 billion after eight straight weeks of decline in reserves after touching an all-time high of $705 billion on September 27, 2024. 

 

Foreign currency assets, a major component of the reserves, decreased by $3.228 billion to $565.623 billion for the week ended December 6, 2024, as per the data.

 

The movement in foreign currency assets depends on the effect of appreciation or depreciation of currencies like the euro, pound and yen held in the foreign exchange reserves against the dollar.

 

Meanwhile, gold reserves dropped by $43 million to $66.936 billion in the week under consideration. While, the Special Drawing Rights (SDRs) increased by $25 million to $18.031 billion, RBI data showed.

 

India’s reserve position with the IMF rose by $12 million to $4.266 billion in the reporting week.