India's forex reserves dip after rising for five straight weeks

New Delhi: Breaking the trend of the fifth consecutive week of rising foreign exchange reserves, they fell by USD 571 million to USD 563.499 billion in the week that ended on December 16, Reserve Bank of India's Bulletin Weekly Statistical Supplement data showed on Friday.

During the week that ended December 9, the country's forex reserves were at USD 564.07 billion, earlier data showed. According to RBI's latest data, India's foreign currency assets, the biggest component of the forex reserves, declined by USD 500 million to USD 499.624 billion.
Further, gold reserves during the latest week declined by USD 150 million to USD 40.579 billion.
At the start of 2022, the overall forex reserves were at USD 633.61 billion.

Barring the past five odd weeks, the forex reserves have been intermittently falling for months now largely because of RBI's intervention in the market to defend the depreciating rupee against a surging US dollar.

Overall, India's forex reserves had declined sharply ever since Russia invaded Ukraine in late February when imports of energy and other commodities got costlier globally, which necessitated the higher requirement of reserves for trade settlement.
Typically, the RBI from time to time intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.

The Reserve Bank of India's operations in Rupee's defence has resulted in net sales of USD 33.42 billion till September 2022, Union finance minister Nirmala Sitharaman informed Lok Sabha recently.
Sitharaman responded to a question about whether the RBI has been using foreign exchange reserves to stem the fall in the Indian currency.