India's Forex Reserves Decline To $651.9 Billion

India's foreign exchange reserves fell to $651.9 billion for the week-ended June 28, the Reserve Bank of India data showed on Friday. The forex kitty fell by $1.71 billion over the previous reporting week.

The decline in forex reserve comes as the RBI reportedly intervened in the domestic currency market, amid pressure on the rupee, by selling dollars from its reserves. The local currency weakened by 0.3% in June.

The forex stock had recovered after hitting a low of $524.5 billion in October 2022, as the central bank replenished its kitty amid solid overseas inflows.

Foreign investors have pumped in Rs 1.03 lakh crore into the country's debt and equity markets so far this year, according to data from the National Securities Depository Ltd. The capital flow has largely gone into the domestic debt market, while equities has seen tepid inflows.

For the week-ended June 28, foreign currency assets—a major component of the reserves—declined by $1.2 billion to $572.8 billion, RBI data showed.

In dollar terms, foreign currency assets include the effect of the appreciation or depreciation of non-US units like the euro, pound and yen held in foreign exchange reserves.

Gold reserves decreased by $427 million to $56.5 billion during the week.

Last month, RBI Governor Shaktikanta Das said that the central bank is focused on building robust buffers of foreign currency reserves through its intervention in the dollar-rupee currency market.

"It's our prime focus to build up a strong umbrella in the form of substantial quantum of forex reserves, which will help us when the cycle turns or when it rains heavily," Das said.