India’s forex reserves experienced a significant drop of over $10 billion, prompting analysis of the factors influencing the Indian economy and the Reserve Bank of India’s (RBI) response to the West Asia conflict.

Photograph: Kham/Reuters

India’s forex reserves dropped by $10.288 billion to $688.058 billion during the week ended March 27, the Reserve Bank of India (RBI) said on Friday.

In the previous reporting week, the overall reserves had declined by $11.413 billion to $698.346 billion.

The kitty had expanded to an all-time high of $728.494 billion during the week ended February 27 this year, before the onset of the West Asia conflict.

The rupee has come under pressure since the start of the West Asia conflict, and the RBI has been intervening in the forex market through dollar sales and has also taken some surprising policy measures to harness the fall.

Decline in Foreign Currency Assets

For the week ended March 27, foreign currency assets, a major component of the reserves, decreased by $6.622 billion to $551.072 billion, the central bank’s data showed.

Expressed in dollar terms, the foreign currency assets include effects of appreciation or depreciation of non-US units, such as the euro, pound, and yen, held in the foreign exchange reserves.

Gold Reserves and SDRs

Value of gold reserves decreased by $3.666 billion to $113.521 billion during the week, the RBI said.

The Special Drawing Rights (SDRs) were up $17 million to $18.649 billion, the apex bank said.

India’s reserve position with the IMF was down by $17 million to $4.816 billion in the reporting week, according to the apex bank’s data.