Foreign currency assets play a major role in foreign exchange reserves. Foreign currency assets are foreign currencies including the US dollar.
In the week ended August 26 not only forex assets declined but other indices also declined. The main reason for this is the outflow of foreign investments from India.
India’s exports decline.. Trade deficit doubles!
The market is in crisis due to the fear of economic recession at the international level. Last month, US Federal Reserve Chairman Jerome Powell indicated that interest rates would be raised further in the coming days and that he was willing to sacrifice growth to reduce inflation.
As a result, foreign investors are withdrawing investments from India. This is putting a strain on India’s foreign exchange reserves.
India’s foreign exchange reserves fell by $3.007 billion to $561.046 billion in the week ended August 26, according to RBI data. Foreign exchange assets declined by $2.571 billion to $498.645 billion. So far, gold reserves have fallen by $271 million to $39.643 billion.