India's Forex Reserves Declines by $2 Billion to $688.27 Billion

India's Foreign Exchange (FOREX) reserves have fallen for the third week in a row, decreasing by $2 billion to reach $688.27 billion as of October 18. This information was revealed in data released by the Reserve Bank of India (RBI).

According to the RBI's Weekly Statistical Supplement, the main reason for this decline was a significant drop in Foreign Currency Assets (FCAs), which fell by $3.75 billion, now totaling $598.26 billion. On the other hand, gold reserves increased by $1.78 billion, bringing their total to $67.4 billion.

In the previous two weeks, India's reserves had already dropped by $14.5 billion. These changes in foreign currency assets reflect the central bank's interventions in the forex market and fluctuations in the value of the foreign assets that comprise the reserves.

The RBI actively participates in the forex market to curb excessive volatility in the rupee's value. During this period, the rupee reached a record low of 84.0775 per U.S. dollar amid significant equity outflows. However, the RBI's efforts, including the ongoing dollar sales from state-run banks, have helped to mitigate further losses.

This month, foreign investors have withdrawn over $9.5 billion from Indian stocks, surpassing the previous record outflow of $8.35 billion that occurred in March 2020. The forex reserves also include India's reserve tranche position with the International Monetary Fund (IMF). As of now, the rupee closed at 84.08 per dollar, showing little change from the previous week.

The RBI does not aim for a specific target for the rupee's value; instead, its goal is to ensure stability in the foreign exchange markets.

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