India's forex reserves drop to $593 billion after rising for 2 straight weeks due to uncertainty in US

Clouds of uncertainty surrounding the decision to increase the US debt ceiling, have triggered a shortage of the dollar, and hit the Indian Rupee's health. A weakening Rupee means that the Reserve Bank of India has to part with foreign exchange reserves to maintain stability.

As a result, India's forex reserves have registered a dip after growing for two weeks in a row.

Clouded by global uncertainty

India's foreign exchange reserves stood at $593.47 billion after a $6 billion drop for the week that ended on May 19, 2023.

A major reason for this decline was the drop in foreign currency assets by $4.65 billion, caused by the depreciation of currencies such as the Euro and the Japanese Yen.

At $524.94 billion, the foreign currencies account for a bulk of the forex reserves which stand at nearly $593 billion.

Hedge eroding as well

Gold, which is considered a safe bet during a global turmoil, also went down by $1.23 billion, and now accounts for $45.13 billion of the total reserves.

Although the forex reserves are a long way away from the all-time high of $645 billion which they scaled during the pandemic in October 2021, Commerce Minister Piyush Goyal said that India has strong reserves.

He added that India has enough foreign assets to meet the requirements even in a worst-case scenario.