Forex reserves dip from record high amid rupee volatility

Forex reserves dip: India's foreign exchange reserves, tracked under ended a three-week growth streak, standing at $646.67 billion as of May 24, according to central bank data released on Friday. This marks a $2 billion decline from record high reached earlier, following a cumulative rise of $10.8 billion over previous three weeks.

Reserve Bank of India (RBI) regularly intervenes in forex market to manage excessive volatility in rupee. In its annual report released on Thursday, RBI announced plans to "enhance intervention toolkit" to furr curb undue rupee volatility against dollar in fiscal 2025, though specific new tools were not disclosed.

Fluctuations in foreign currency assets result from RBI's market interventions and changing value of foreign assets held within reserves. se reserves also encompass India's reserve tranche position with International Monetary Fund.

During week of reported forex data, rupee fluctuated between 83.0250 and 83.3600 against dollar, recording its best performance in over five months. However, currency settled at 83.4625 on Friday, marking its worst week in more than two months.

(With Reuters inputs)