India's Forex Reserves Drop By $6.052 Billion, Foreign Currency Assets Decline

India's foreign exchange (forex) reserves fell by $6.052 billion to $593.477 billion for the week ended May 19, snapping two weeks of advances, according to Reserve Bank of India (RBI) data.

The country's foreign currency assets, the largest component of the forex reserves, fell by $4.65 billion to $524.94 billion, according to the RBI's weekly statistical supplement released on Friday.

Foreign currency assets, expressed in US dollars, comprise the effect of appreciation or depreciation of non-US currencies such as the pound, euro, and yen held in FX reserves.

Following two weeks of advances, FX reserves have fallen. The country's foreign exchange reserves had grown by $3.5 billion in the previous reporting week.

During the week ending May 19, the value of gold reserves fell by $1.22 billion to $45.12 billion.

During the reviewed week, there was a decline observed in all significant components of the country's foreign reserves. The reserve position of India in the International Monetary Fund (IMF) has decreased by $35 million to $5.13 billion. SDRs (Special Drawing Rights) dropped by $137 million to $18.27 billion.

The intervention of the RBI in currency markets, through the sale of dollars to prevent the weakening of the rupee, often leads to a substantial decline in forex reserves.

Shaktikanta Das, Governor of the Reserve Bank of India, defended the central bank's intervention in currency markets earlier this week. "We had to intervene in the market because our primary focus is to maintain the stability of the Indian rupee, the stability of the exchange rate," Das explained, referring to the RBI's intervention in currency markets following the outbreak of the Russia-Ukraine war, which resulted in capital outflows from emerging markets.