India’s foreign reserves dipped for the first time in 6 months, as of December 20. The Reserve Bank of India, which is responsible for holding these said reserves, divulged this report.
India’s Foreign Reserves Drop
As per the RBI report, the total foreign reserve in India dipped to USD 644.39 billion, declining by USD 8.4 billion.
The is the lowest count attained in 6 months.
Foreign reserve for a country and its central bank is the amount of monetary resources held by a country and its central bank that are not its own currency. In most cases, the United States Dollar or US Dollar is the most preferred form of foreign currency, as it is the world’s reserve currency.
Foreign currency is essential for multiple reasons. Some of them include paying debt, as debts are usually paid in this currency. Another important facet is trade, given India’s dependence on imports for its consumption, majority of the trade transpires in foreign currency, mostly in the dollar.
In addition, having additional foreign reserves also helps in adjusting monetary policy, come the need for it.
India’s Gold Reserves Dips As Well
In addition to this, India’s gold reserve also dropped. As per the RBI, India’s gold reserves stumbled by USD 2.3 billion to USD 65.7 billion.
This comes at a time when the value of the Indian currency has been on a downward slope. In fact, in the past couple of weeks, the value of the Indian currency has hit all-time low, when compared to the resurgent US dollar.
The Indian rupee currently stands at 85.393 against a single bill of a US dollar.
On December 27, the Rupee displayed its worst performance ever, when it dipped to 85.733 against the US dollar. Just in the past 5 days alone, the value of the Indian Rupee has dipped by 0.25 per cent.
Markets In Red
In addition, its also needs to be noted that the Indian equity markets have also underperformed over the past few weeks.
Even last week, despite closing in green on Friday, the overall picture of the last 5 trading sessions was bleak. The BSE Sensex dipped by 0.13 per cent or 104.64 points, slumping to 78,699.07.
The story was no different at the NSE, as the Nifty also dipped by 0.41 per cent or 98.90 points, taking the overall value to 23,813.40 points.
