India’s foreign exchange reserves witnessed significant changes in recent weeks, as reported by the Reserve Bank of India (RBI).
Week Ending February 23, 2024
- Total Reserves: $619.07 billion
- Increase: $2.98 billion
- Components:
- Foreign currency assets (FCAs): $548.19 billion
- Gold reserves: $47.85 billion
- Special Drawing Rights (SDRs): $18.2 billion
- Reserve position in the IMF: $4.84 billion
Week Ending February 16, 2024
- Total Reserves: $616.1 billion
- Decrease: $1.13 billion
Factors Impacting Reserves
- FCAs: Affected by the appreciation or depreciation of non-US units like the euro, pound, and yen.
- Gold Reserves: Expanded by $472 million.
- SDRs: Increased by $89 million.
- IMF Reserve Position: Rose by $9 million.
Historical Context
- In October 2021, India’s forex reserves peaked at USD 645 billion.
- Reserves have been decreasing due to interventions aimed at defending the rupee amidst global pressures.
RBI Intervention
- RBI intervenes in the forex market to manage liquidity and prevent steep rupee depreciation.
- Interventions aim to maintain orderly market conditions and control excessive volatility.
Multiple Choice Questions (MCQs) with Answers:
- What was India’s foreign exchange reserves for the week ending on February 23, 2024?
- A) $616.1 billion
- B) $619.07 billion
- C) $548.19 billion
- D) $645 billion
- Answer: B) $619.07 billion
- Which component of India’s reserves increased by $2.41 billion during the mentioned week?
- A) Gold reserves
- B) Foreign currency assets (FCAs)
- C) Special Drawing Rights (SDRs)
- D) Reserve position in the IMF
- Answer: B) Foreign currency assets (FCAs)
- In which month of 2021 did India’s forex reserves reach an all-time high?
- A) September
- B) October
- C) November
- D) December
- Answer: B) October
- What is the primary aim of RBI interventions in the forex market?
- A) To increase the value of the rupee
- B) To maintain orderly market conditions and control excessive volatility
- C) To deplete foreign exchange reserves
- D) To set a pre-determined target level for the exchange rate
- Answer: B) To maintain orderly market conditions and control excessive volatility