India's forex reserves contract by $5.4 billion to $643.16 billion

This comes after a significant increase in reserves by $2.9 billion to a historic high of $648.56 billion for the week ending on April 5, 2024.

The Weekly Statistical Supplement provided by the RBI reveals that Foreign Currency Assets (FCAs) plummeted by $6.51 billion, amounting to $564.65 billion.

FCAs, when denominated in dollars, consider the impact of fluctuations in currencies other than the US dollar, such as the euro, pound, and yen, which are part of the foreign exchange reserves.

Gold reserves, on the other hand, witnessed an uptick of $1.24 billion, reaching $55.8 billion, while Special Drawing Rights (SDRs) experienced a decrease of $93 million, resting at $18.08 billion.

Further, India's reserve position in the International Monetary Fund (IMF) saw a slight decline of $35 million, totaling $4.63 billion.

The RBI occasionally intervenes in the market to manage liquidity, which may involve selling dollars, aiming to prevent a rapid depreciation of the rupee.

The central bank closely monitors foreign exchange markets and intervenes to ensure orderly conditions, aiming to curb excessive volatility in exchange rates, without adhering to any predetermined target level or range.