India's foreign exchange reserves stood at $657.89 billion while the gold component of the kitty was valued at $65.75 billion, as of November 15, according to official figures released by the RBI on Friday.
India's foreign exchange reserves were at $675.65 billion on November 8 but since the RBI has been releasing dollars in the market to prop up the rupee, the reserves have come down by $17.7 billion, according to market analysts.
The SDR portion of the forex kitty was pegged at $18.06 billion.
The country's foreign exchange reserves have overall increased by $11.5 billion in the current financial year. India's foreign exchange reserves had touched an all-time high of $704.885 billion at the end of September, which made the country the 4th in the world's table for the size of its forex kitty after China, Japan, and Switzerland. This showcases strong macroeconomic fundamentals for the economy.
The RBI uses the forex reserves to control the volatility in the rupee which results as hot money from the stock market flows out when foreign investors sell shares.
Meanwhile, Reserve Bank Deputy Governor Rabi Sankar said at a media event recently that the RBI is well equipped to handle excessive exchange rate volatility that could result as a fallout of the Donald Trump presidency.
The RBI comes out with dollars in the market if the rupee falls sharply so that it does not go to free-fall. This will keep the Indian currency stable. Strong foreign exchange reserves make such operations easy, and the rupee gets a boost in strength.
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