Forex reserves retreat from record highs after 7-week surge

India's foreign exchange reserves witnessed their first decline in eight weeks, retreating from record highs to reach $643.16 billion as of April 12, according to data released by the central bank on Friday.

The reserves saw a decrease of $5.4 billion during the reporting week, marking the most significant drop in over three months. Prior to this decline, the reserves had surged by a total of $32.5 billion over the course of the previous seven weeks.

The Reserve Bank of India (RBI) has been actively intervening in the foreign exchange market to mitigate excessive volatility in the rupee's exchange rate. Recent sessions have seen the RBI selling dollars to prevent a significant depreciation of the rupee, amidst geopolitical tensions in the Middle East and concerns over delayed rate cuts by the Federal Reserve, as reported by Reuters.

Fluctuations in foreign currency assets are influenced by the RBI's intervention as well as changes in the valuation of foreign assets held within the reserves. Additionally, India's foreign exchange reserves encompass its reserve tranche position in the International Monetary Fund.

During the week in question, the rupee experienced a marginal decline of 0.1% against the dollar, trading within a range of 83.15 to 83.4250. Ultimately, the domestic currency settled at 83.47 on Friday, following an earlier dip to a record low of 83.5750 during the session. Overall, the rupee concluded the week with a slight downward trend.

(With Reuters inputs)