Bulk of the decline in India's forex reserves stems from the change in valuation as the dollar strengthened, and not because of intervention by the Reserve Bank of India to defend the currency, according Governor Shaktikanta Das.
The Reserve Bank of India has always kept the adequacy of reserves in mind, Das said in his monetary policy speech on Friday.
India's foreign exchange reserves stood at $537.5 billion, Das said. About 67% of the decline in forex reserves in FY23 was due to valuation changes resulting from dollar appreciation, he said.
There was a net accretion of $4.6 billion to the forex reserves during the current financial year, he said.
RBI interventions in the forex market are based on continuous monitoring and assessment of prevailing market conditions, and the central bank remained judicious in its strategy, Das said, explaining that the RBI does not have any exchange rate in mind for the Indian currency.
The rupee is a freely floating currency, its exchange rate market determined.Shaktikanta Das, RBI Governor
The central bank's interventions are aimed at curbing excessive volatility, he said, adding that the RBI's actions have improved investor confidence. Rupee rose to day's high, after the central bank governor's address. The Indian currency appreciated 39 paise to 81.46 during the session.
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