Foreign Currency: India's foreign exchange reserves have declined by about $48 billion in the last two months. On one hand, it had reached an all-time high of $704.88 billion at the end of September. On the other hand, it had fallen to a several-month low of $656.582 billion in the week ending November 22.

However, if we talk about the last one week, then after 2 months of continuous decline, India's foreign exchange reserves have once again jumped. The foreign exchange reserves increased from $ 1.51 billion to $ 658.09 billion in the week ending November 29. However, if you look at the overall, you will still see a huge decline in India's foreign exchange reserves. Let us understand the reason behind this in this news today.

Why did India's foreign exchange reserves decrease

The biggest reason for the decline in India's foreign exchange reserves in the last two months is the rupee being under pressure, i.e. weakening against the dollar. Because, the dollar had become stronger due to Donald Trump's victory in the US presidential election. Due to the rupee continuously weakening against the dollar, the Reserve Bank was continuously selling dollars to stop the fall in the rupee.

Foreign exchange reserves also decreased due to these reasons

On the other hand, due to increasing geopolitical tensions in the Middle East, foreign investors are continuously withdrawing money from the Indian stock market and investing in China. To deal with this, the Reserve Bank has been following the policy of strategic intervention in foreign exchange markets for a long time, which focuses on preventing excessive fluctuations rather than maintaining a fixed exchange rate target. This includes measures like selling dollars to prevent a sharp fall in the rupee and buying dollars at the time of strength.