New Delhi : The country’s foreign exchange reserves declined by $ 778 crore to $ 578.568 crore in the week ended on December 11. The foreign exchange reserves had increased by $ 4.525 billion to reach the all-time high of $ 579.346 billion last week.
According to the data released by the Reserve Bank of India, the currency reserves declined due to the decrease in foreign currency assets (FCA) during the period under review. Foreign currency assets constitute a significant portion of the total foreign exchange reserves. According to the Reserve Bank’s weekly data, FCA declined by $ 1.042 billion to $ 536.344 billion in the review period. The FCA is denominated in dollars, but includes other foreign currencies such as Euro, Pound and Yen.
Gold reserves stood at $ 36.012 billion
According to the data, the value of the country’s gold reserves rose by $ 284 million to $ 36.012 billion during the week under review on December 4. The country received special drawing rights in the International Fund for Fund (IMF), down by $ 3 million to $ 1.503 billion and the IMF’s accumulated reserves also declined by $ 16 million to $ 4.709 billion.
What is foreign exchange reserves?
Foreign exchange reserves are funds or other assets held by the country’s central banks, which are used to pay off liabilities when needed. Adequate foreign exchange reserves are very important for a healthy economy. It provides much needed help to the economy in the event of an economic crisis to support imports. This includes foreign currency assets, gold reserves and other reserves in the IMF, of which foreign currency assets hold the largest share after gold.