The recent decline in India’s foreign exchange (forex) reserves is not considered the sharpest or most concerning drop, as clarified by the Ministry of Finance in the Lok Sabha. While the reserves have experienced fluctuations recently, including a decrease of $20.1 billion over four weeks ending in early November, this is largely attributed to the Reserve Bank of India’s interventions to stabilize the rupee amidst global economic pressures. The reserves remain robust, providing coverage for several months of imports, which experts see as a sign of economic resilience.
Source:- BBC news
The depreciation of the rupee against the US dollar and capital outflows from equity markets have contributed to the reserve fluctuations. However, the central bank’s strategic management of foreign assets has mitigated more severe impacts. The gold reserves have even shown an increase during this period, offsetting some of the declines in foreign currency assets.
Source:- news 18
Despite the decline, India’s forex position is still considered strong, and the government views this as a manageable situation rather than a crisis. Economic experts highlight the adequacy of reserves to handle current challenges and support ongoing import needs.
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