India's Forex Reserves Dwindle: Navigating Economic Challenges

India's foreign exchange reserves have continued their downward trajectory, falling by USD 3.06 billion to USD 696.67 billion as observed in the week ending July 11. This marks the second consecutive week of decline, as detailed in the latest data from the Reserve Bank of India (RBI).

The dip is primarily attributed to a reduction in foreign currency assets, which decreased by USD 2.477 billion to USD 588.81 billion. Gold reserves also suffered a significant drop, declining by USD 498 million to stand at USD 84.348 billion. Moreover, India's Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) experienced a reduction of USD 66 million, dwindling to USD 18.802 billion.

Despite these challenges, India's external sector shows resilience. In 2023, the country bolstered its foreign exchange reserves by USD 58 billion, despite a previous decline. By the end of 2024, reserves reached an all-time high of USD 704.885 billion, providing a robust cushion for imports and external debt. Governor Sanjay Malhotra conveyed optimism, citing improving external sector indicators.

(With inputs from agencies.)