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.