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 the record high reached earlier, following a cumulative rise of $10.8 billion over the previous three weeks.

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

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

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

(With Reuters inputs)