The country’s forex reserves decreased by $2.415 billion to stand at $576.869 billion in the week ending April 2, 2021, the Reserve Bank of India (RBI) information revealed on Friday.
The decrease in the reserves was mostly on account of a fall in foreign currency assets (FCAs), a major part of the total books.
The FCA consist of the result of appreciation or depreciation of non-US currencies like the euro, pound and yen kept in the forex reserves.
The gold reserves dropped by $884 million to $34.023 billion in the reporting week, as per the reserve bank data.
The Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) dipped by $4 million to $1.486 billion.
The Reserve Bank functions as the custodian as well as supervisor of forex reserves, and also operates within the total plan structure agreed upon with the federal government. The RBI allocates the funds for specific objectives. As an example, under the Liberalised Remittances System, individuals are allowed to pay up to $250,000 annually. The RBI uses its forex reserves for the organized movement of the rupee. It sells the dollar when the rupee deteriorates and also acquires the dollars when the rupee enhances.