Reserves drop by $1.78 billion, now 10% below all-time high; RBI steps in to curb Rupee depreciation
New Delhi, March 9 – India’s foreign exchange reserves fell by $1.781 billion to $638.698 billion in the week ending February 28, according to the latest data released by the Reserve Bank of India (RBI).
The decline comes amid rollercoaster movements in forex reserves, which had earlier slumped for four consecutive months, hitting an 11-month low before fluctuating between gains and losses in recent weeks. Since reaching an all-time high of $704.89 billion in September, forex reserves are now down by approximately 10%.
RBI’s Intervention to Stabilize Rupee
The fall in reserves is likely due to RBI’s market intervention, aimed at preventing sharp depreciation of the Rupee, which is currently hovering near its all-time low against the US Dollar. The RBI manages liquidity through strategic buying and selling of dollars—selling when the Rupee weakens and accumulating reserves when the currency strengthens.
“The RBI’s active forex management is critical to preventing excessive volatility in the currency market,” analysts noted.
Breakdown of India’s Forex Reserves
🔹 Foreign Currency Assets (FCA): $543.350 billion (largest component of reserves)
🔹 Gold Reserves: $73.272 billion
Estimates suggest that India’s forex reserves are sufficient to cover 10-11 months of projected imports, providing a strong buffer against external economic shocks.
India’s Forex Trends in Recent Years
📉 2022: Forex reserves declined by $71 billion due to global economic uncertainty.
📈 2023: India added $58 billion to its reserves, marking a strong recovery.
📈 2024: Reserves have increased by over $20 billion so far.
With global economic conditions remaining uncertain, RBI’s forex strategy will continue to play a crucial role in stabilizing the Rupee and managing liquidity in the financial system.
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