Mumbai, April 19 (IANS): India's foreign exchange reserves fell by $5.4 billion to $643.16 billion as of April 12, according to the latest weekly data released by the RBI on Friday.
This is the first time in 8 weeks that the foreign exchange reserves have recorded a fall after having touched lifetime highs in the preceding weeks.
Market analysts attribute the decline to the RBI actively releasing dollars in the market to curb the volatility in the rupee.
The Indian currency has tended to weaken as oil prices have been on the rise which has triggered an increase in the demand for dollars to finance costlier imports.
The data released on Friday showed that the foreign currency portion of the reserves fell by as much as $6.51 billion in the week ended April 12.
However, there was an increase of $1.24 billion in the value of gold assets held by the RBI which cushioned the fall of the forex kitty.
Central banks have also been buying gold in recent months as an investment in safe-haven assets amid geopolitical uncertainties triggered by the Middle East conflict.
India's foreign exchange reserves had gone up by $2.98 billion during the week ended April 5 to scale a new all-time high of $648.562 billion.
That was the seventh consecutive week of a jump in overall reserves.
The forex kitty had increased by $2.95 billion during the preceding week ended on March 29, after notching a cumulative $26.5 billion rise in the previous five weeks.
RBI Governor Shaktikanta Das had earlier this month referred to the record foreign exchange reserves as a reflection of the strength of the Indian economy.
"It is our prime focus to build a strong buffer in the form of a substantial quantum of forex reserves which will help us when the cycle turns or when it rains heavily," he remarked while unveiling the first monetary policy review of the current financial year that began on April 1.
India's forex reserves, including the central bank's forward holdings, can now cover more than 11 months of imports, which is a two-year high.
The RBI Governor also said that the Indian rupee (INR) has remained largely range-bound as compared to both its emerging market peers and a few advanced economies during 2023-24 and was the most stable among major currencies during this period.