Decline in foreign exchange reserves, gold reserves also reduced

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(Aditya Shaw, Intern Journalist): After touching a record high, the country’s foreign exchange reserves declined by $ 29 million to $ 580.841 billion in the week ended December 25. This information has been given in the Reserve Bank data. Earlier in the week ended December 18, foreign exchange reserves had risen by $ 2.563 billion to touch an all-time record high of $ 581.131 billion.

According to data released by the Reserve Bank of India, the depletion of foreign currency assets (FCA) in the reporting period led to a decrease in the currency reserves. Foreign currency assets form a major part of the total foreign exchange reserves. According to the Reserve Bank’s weekly data, the FCA declined by $ 253 million to $ 537.474 billion in the reporting period. The FCA is denominated in dollars but includes other foreign currencies such as Euro, Pound, and Yen.

According to the data, the value of the gold reserves of the country decreased by $ 308 million to $ 36.711 billion during the week ended December 25. The country’s special drawing rights in the International Fund for Fund (IMF) also declined by $ 4 million to $ 1.510 billion, while the reserve reserves with the IMF increased by $ 276 million to $ 5.145 billion.

Foreign exchange reserves are funds or other assets held by the country’s central banks, which are used to pay off liabilities when needed. Adequate foreign exchange reserves are very important for a healthy economy. It provides much-needed help to the economy in the event of an economic crisis to support imports. This includes foreign currency assets, gold reserves, and other reserves in the IMF, of which foreign currency assets hold the largest share after gold.