India’s Forex Reserves Drop by $3.46 Billion, Now at $684.8 Billion – Latest Update

India’s Forex Reserves: New Delhi, Nov 30 Amid sustained selling of equities in the domestic market by foreign institutional investors and increasing geopolitical tensions, India's forex reserves slipped to $684.8 billion in the week ended 25 October from $688.26 billion, as per the data released by the Reserve Bank of India on Friday.

The gold reserves part of the foreign exchange kitty have increased by $1.08 billion during the week to $68.53 billion, said the central bank.

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Gold has seen increased buying in a period marked by geo-political tensions. Traditionally a safe haven asset, gold has now emerged as a hedge against US economic sanctions too, said experts.

Even though the inflation of prices is restrained, the prices of gold have continued to break new records. The contribution of gold also increased 215 percent since the calendar year of 2018 in the country's forex reserves.

India had reached an all-time record foreign exchange reserve of USD 704.885 billion as of end-September. This made the nation reach the fourth spot globally behind China, Japan, and Switzerland in terms of the size of its forex kitty.

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The country's forex reserve has increased by $38.39 billion compared to the previous financial year, which is sufficient to pay for the imports for 11.2 months as estimated by balance of payments, RBI said. Going by this report, macroeconomic fundamentals of the economy are quite robust.

The increase in forex reserves in India is likely to enhance the economic growth trajectory of India by increasing its international strength, attracting foreign investments, and stimulating domestic trade and industry. Changes in foreign currency assets are due to the action of the central bank in the forex market and the fluctuation in the value of foreign assets within the reserves.

Experts expect the bullion to close this week in positive as it has support from safe demand, ETF buying, uncertain US election outcome, and rising bets for aggressive rate cuts from global central banks.

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