Foreign exchange reserves for India had decreased by $711 million in the week ended June 5, says the Reserve Bank of India. The decline was mainly due to a sharp reduction in foreign currency assets. The current total foreign exchange reserves have now been recorded to be $681.610 billion.

Total foreign exchange reserves in the previous week had increased by $938 million to $682.321 billion. Foreign currency assets declined by $2.704 billion to $543.444 billion during the week ended June 5. Foreign currency assets form a major component of foreign exchange reserves. When valued in dollar terms, foreign currency assets also indicate the impact of valuation changes of foreign currencies such as Euro, Pound and Yen apart from US Dollar.

Gold reserves, however, increased by $1.975 billion to $114.575 billion this week. Increase in Special Drawing Rights (SDRs) was $18 million to $18.765 billion. India’s reserve position with the International Monetary Fund (IMF) was $4.826 billion.

Foreign currency assets constitute the largest component of foreign exchange reserves. These include currencies of various countries. This week, a significant decrease of $2.704 billion was recorded. This decrease is primarily due to fluctuations in the value of non-US currencies such as the euro, pound, and yen.

Did gold reserves provide some relief?
Yes, gold reserves saw an increase this week. The value of gold increased by $1.975 billion to $114.575 billion. This helped offset the decline in foreign exchange reserves to some extent. Special Drawing Rights and the reserve position with the IMF also increased slightly.