India’s Foreign Exchange Reserves Drop After Reaching Record High
India’s foreign exchange reserves have decreased by USD 3.471 billion, bringing the total to USD 667.386 billion for the week ending July 26. This follows a record high of USD 670.857 billion the previous week, breaking a three-week rising streak.
According to the Reserve Bank of India (RBI), foreign currency assets, the largest part of the reserves, fell by USD 1.171 billion to USD 586.877 billion. Gold reserves also dropped by USD 2.297 billion to USD 57.695 billion.
Despite the decline, India’s foreign exchange reserves are still enough to cover over 11 months of projected imports. In 2023, the RBI added about USD 58 billion to the reserves, while in 2022, the reserves fell by USD 71 billion due to higher import costs and market interventions to stabilize the rupee.
The RBI intervenes in the foreign exchange market to manage the rupee’s value against the US dollar, aiming to maintain orderly market conditions without targeting specific exchange rates.
Doubts Revealed
Foreign Exchange Reserves -: These are assets held by a country’s central bank in foreign currencies. They include foreign currency deposits, bonds, and gold.
USD -: USD stands for United States Dollar, which is the currency of the United States. It is often used in international trade and finance.
Record High -: This means the highest level ever reached. In this case, it refers to the highest amount of foreign exchange reserves India has ever had.
Reserve Bank of India (RBI) -: The RBI is India’s central bank. It manages the country’s money supply and foreign exchange reserves, and it helps keep the economy stable.
Foreign Currency Assets -: These are assets held in currencies other than the Indian Rupee. They can include foreign banknotes, deposits, bonds, and other financial instruments.
Gold Reserves -: These are gold holdings kept by the central bank. They are part of the country’s foreign exchange reserves and can be used in times of economic need.
Imports -: Imports are goods and services that a country buys from other countries. For example, India imports oil, electronics, and machinery from other countries.
Rupee -: The Rupee is the official currency of India. Its value can change compared to other currencies like the US Dollar.
Intervenes in the market -: This means that the RBI takes actions, like buying or selling currencies, to influence the value of the Rupee and keep the economy stable.
